Partnering in 2024 - Forging a path of innovation

Reflecting on 2023

As #JPM2024 draws to a close, there’s no better time to reflect on the peaks and troughs of 2023 and on what 2024 has in store for us as an industry and for #partnering.

In 2023, as anticipated , we saw themes of global uncertainty and economic contraction, as the broader #biotech industry continued to adjust to shrinking investment after the rapid inflow of capital during the COVID-19 pandemic. With capital continuing to move out of the sector, many biotechs have looked to combat this by downsizing or refocusing their efforts.

Despite ongoing challenges, it has been encouraging to see the 2023 biotech landscape peppered with spells of positivity with a large number of new approvals and positive signals at the end of the year, with rising market indices and the XBI up by almost 9.5% over the year. The XBI proved to be a good proxy for the tumultuous year of biotech, as it reached its annual low in late October but rallied 39% in December. While the numbers of deals in 2023 remained roughly flat with 2022, investment via M&A and licensing was up significantly albeit driven by a few major transactions like Seagen/Pfizer and Daiichi Sankyo/Merck.. Taking out the mega M&A? deals of >$15bn, we see M&A upfronts + equity almost double compared to last year indicating a recovery in M&A across the sector.?

The $7.1 billion Roche acquisition of Telavant was just one of the significant and exciting deals contributing to this trend. These positive signals should? give some optimism as to what the next 12 months will do for the biotech sector and partnering.

As we navigate the financial environment of 2024, we must not lose sight of the unwavering foundation of our industry, to persistently pursue? innovative medicines based on a robust scientific understanding of the pathophysiology of human disease.?

Extrapolating trends from 2023 into 2024????

Closing the chapter on 2023,? it is important to remember that downward trends are part of the natural financial and innovative cycles that characterize our industry (while bearing in mind that the basis for these cycles is very different in pharma than in biotech).??

The continuation of a challenging financial environment for the biotech sector creates the risk of reducing both scientific innovation and the number of attractive new medicines. In 2023, we’ve seen only 16 IPOs with a total raise of $2.8b - which is on par with 7 year lows. VC funding was down 28% and at a five year low with a total amount raised of $17.7b.?

As we enter 2024, we shall see if the positive market signals at the end of last year and potential interest rate cuts will spur investor’s risk appetite. In terms of M&A and licensing, we have already seen a slight uptick in deals in the last quarter, which could indicate a year of high deal-making activity, with some experts expecting deals to total $225 billion to $275 billion this year.

While we see some initial encouraging market signals, a rapid and full recovery of the biotech sector is not expected in the near future. The broader macroeconomic uncertainty paired with the sector's naturally risky business model will likely keep the funding outlook for 2024 uncertain. Forging a path of innovation, partnering remains a key opportunity for biotech and pharma companies.

How can we continue to foster innovation together?

With lower market valuations and challenges in accessing capital, as I've spoken about before , partnerships with established companies can financially and operationally help stabilize biotech companies - especially in these choppy financial waters. By joining forces, biotech and pharma can unite their complementary capabilities and leverage each other’s expertise to optimize the discovery and development of new medicines. One example is the three-party alliance between 罗氏公司 , PTC Therapeutics, Inc. and the SMA Foundation, Inc. that led to the development of a first-of-its-kind treatment for spinal muscular atrophy which has reached patients in more than 100 countries to date.?

Roche’s end-to-end capabilities, including the biggest biopharma manufacturing capacity and a worldwide commercialization network allows us to support biotechs in reaching as many patients in need as possible.?

I believe there is huge value in biotech and pharma coming together in a way that allows innovation to thrive. To enable this we must:

1. Be bold

True innovation continues to generate enormous value for patients, the industry and for the companies driving it. While the times might be uncertain, I want to urge all of us to continue being bold - bold in our approach to partnering and bold to continue investing into unknown and risky areas that hold the potential to revolutionize healthcare, including:

• Artificial intelligence (AI) and machine learning (ML): By investing in AI/ML today, we can fundamentally change drug discovery and development as we know it. Genentech , a member of the Roche Group, entered an exciting partnership with computing giant 英伟达 last year. This is a prime example of how enhancing the capabilities of both companies can be revolutionary while underscoring our willingness to invest into one of the most groundbreaking, yet risky, areas of science today.
• Organoids and RNA: By pioneering new and exciting approaches to drug development, including organoids and RNA therapeutics, Roche and its partners are aiming to have the opportunity to realize the true value of these methods in treating some of the largest health issues around the world.?
• Areas of highest disease burden and challenges for society: Scientific advances in the last few years have opened up new possibilities to treat some of the most extensive health challenges globally. By partnering with Alnylam Pharmaceuticals , Roche aims to contribute to areas of large unmet need and societal burden by providing promising therapy with best-in-disease potential to patients with high blood pressure and high cardiovascular risk. Roche also recently acquired Carmot Therapeutics, Inc. and its R&D portfolio with best-in-class potential to treat obesity – a major health challenge seen across the globe.

2. Move fast

The magnitude of the COVID-19 pandemic showed us how fast the industry can move if we think creatively and act with urgency. To deliver for patients, we need to continue this trajectory with the biggest healthcare challenges in mind. All of us involved in drug discovery and development need to find ways to bring innovation to patients quicker, for example:

• The most innovative ideas are often sparked when pharma and biotech come together, and by engaging even earlier on opportunities to unite in a partnership, we have the chance to discover breakthrough medicines even sooner.
• Medicines that hold huge potential for patients must be moved forward with even more urgency, one way to accomplish this is by removing barriers and working closely with our partners to bring innovation faster to those that need it most.

What’s next?

For 2024, we may see the biotech sector begin a steady recovery in the wake of some unstable years. Now is the time to be bold in our approach to collaboration and move fast with the right partners. By investing in the most revolutionary areas of science, I see Roche, together with strong partners, continuing to lead the next generation of healthcare and provide innovative solutions to large patient populations in areas such as cardiovascular and metabolic diseases, cancer and immunology, and opening up new possibilities for devastating diseases in neurology such as Alzheimer’s.?

I am excited when I think about the scientific advances we will build on in 2024 alongside biotechs, across a range of development stages and therapy areas. I look forward to kicking off the new year exploring new collaborations with like-minded partners!

If you are interested in partnering with Roche and Genentech, please get in touch with us .