Many companies are shedding staff. This week Atara and MacroGenics, two medium-sized public firms, announced big layoffs. An index of biotech companies listed on New York’s Nasdaq exchange has fallen by a quarter since its peak a year ago, further than the sliding nasdaq index overall (see chart). Valuations of unlisted companies are dropping faster than ever, says Lain Anderson of L.E.K. Consulting. Not all will pull through.
[huge_it_slider id=”15″]As non-specialist investors swept up in the pandemic biotech boom retreat, more discerning ones are sharpening their pencils. Some companies suddenly look cheap, especially those with proven treatments or drugs in late-stage trials. Venture-capital firms have raised over $100bn to invest in life-sciences businesses in the past three years, notes Tim Haines of Abingworth, a biotech-focused asset manager. They still have plenty of unspent “dry powder” to deploy.
Big pharma in particular may be eyeing up biotech startups with promising drug pipelines. The giants will see some $300bn-worth of patents expire by 2030, says Mr Haines. Pfizer has been particularly acquisitive—and, thanks to the $37bn it earned last year from sales of its covid vaccines and treatments, particularly flush. On August 8th it agreed to pay $5.4bn for Global Blood Therapeutics, a maker of a treatment against sickle-cell disease, bringing its total takeovers to more than $25bn in the past 12 months.
As for Pfizer’s covid-vaccine partner, BioNTech, it is still worth five times what it was before the pandemic, despite a 50% crash in its market capitalisation since the peak a year ago. Don’t bring out the defibrillator just yet. ■