Supplement to the global biotechnology report 2022 „Beyond Borders“
The Global Biotech Report — “Beyond Borders” 2022 covers key developments in 2021. In this context, additionally, a Swiss supplement is presented, in which local differences and similarities with respect to the global biotech trends and developments are assessed. A snapshot of the Swiss biotech landscape is presented: Following the record year 2020, financing activity in Switzerland's biotech sector continued at a very high level in 2021, with general positive advancement of the product pipeline and the continued high level of regulatory approvals as well as notable M&A transactions and collaborations Switzerland is at the very center of the global biotech momentum.
Reporting record R&D investments in 2021 of CHF 2.6 billion, which can be seen as the validation of Swiss innovation in financial terms, the Swiss Biotech sector continues on a steep upward trajectory. The industry, globally but also in Switzerland, has demonstrated its innovative prowess with its fast-paced responses to fight the COVID-19 pandemic. Not surprisingly, industry leaders are very optimistic about recent advancements in the sector, most notably in mRNA technology.
The capital market and investor landscape is also playing a key role in this development, allowing Swiss biotech companies to raise more than
3.3 b CHFin 2021.
Backed by its innovative strength and heavy investment in R&D, the Swiss industry boasts a healthy product pipeline, with the number of regulatory approvals continuing at high levels. The capital market and investor landscape are also playing a key role in this development, allowing Swiss biotech companies to raise more than CHF 3.3 billion in funds in 2021. On top of this, there was considerable M&A activity as well as some interesting licensing and collaboration deals. Despite the rise in M&A activity, we are also excited to see the net number of total biotech companies continue to increase in Switzerland, which is important for a dynamic and diverse life sciences ecosystem.
Drilling down deeper, the Swiss supplement entails an interview with Raymond De Vré, CEO of SIX Swiss Exchange newcomer PolyPeptide Group. He talks about his experience since the company’s listing on SIX in 2021, gives us some fascinating insights into the peptide business, and shares with us his thoughts on Switzerland’s appeal for pharmaceutical and biotech companies.
One common theme stands out: Switzerland punches well above its weight when it comes to biotech innovation. But the outlook into 2022 is also not bright at all levels, and not bright for all biotech companies.
Beyond borders: EY biotechnology report 2022
The 32nd edition of our Beyond borders report offers a chance to take stock of the US and European biotechnology (biotech) industry’s impressive performance during a period of intense global disruption. When we last published our Beyond borders overview five years ago, we noted the growing geopolitical complexities set to impact biotech. Titling our 2017 report, “Staying the course,” we observed that the industry would have to navigate a business environment in which, increasingly, “uncertainty is the only certainty.” From the perspective of 2022, we can affirm that biotech has indeed successfully stayed the course, despite the upheavals that have affected global business since the last edition of this report.
Beyond borders 5-year difference
In 2017, looming challenges included the impact of the UK’s Brexit vote and the intensifying debate over the future of health care at the outset of the Trump administration in the US. Five years on, there is no question that biotech has not only survived, but has thrived, throughout these and subsequent disruptions — most notably the worldwide turbulence caused by the COVID-19 pandemic since early 2020.
The industry’s success in staying on track is reflected in its exceptionally strong performance in 2021:
Biotech revenues hit a record-shattering US$216.7 billion in 2021 — a dramatic 35% annual increase from 2020.
- The surge was overwhelmingly driven by products related to the COVID-19 pandemic, particularly the mRNA vaccines developed by BioNTech and Moderna.
- Nearly 19% of the total alone was generated by BioNTech and Moderna — producing more than US$40 billion in revenue, a year after only earning US$1.4 billion.
- Projections indicate that spending on vaccines and therapeutics targeting COVID-19 is expected to increase from US$100b in 2021 to US$309b in 2026.
The US$115.3 billion raised by biotechs in 2021 was the second-highest total ever recorded.
Both venture financing and IPOs broke all previous records in 2021. Venture financing reached US$26.2 billion; meanwhile, a record 143 biotech IPOs generated US$19.3 billion. Of these IPOs, 30 were funded via special-purpose acquisition companies (SPACs) — another record.
Yet in 2022, biotech must contend with an operating environment arguably even more uncertain than in 2017. The unforeseeable geopolitical repercussions of the current situation in Eastern Europe will play out on a global business landscape still adjusting to the impact of the pandemic. In the wake of the past two years, biotech (as with other industries) is facing new tests, including supply chain disruption; intensifying competition for talent; challenges to established commercial models; and rising pressure to demonstrate a commitment to addressing environmental, social and governance (ESG) issues — from access and affordability to clinical trial diversity (all explored in detail in our report).
Amid global macroeconomic changes, including resurgent worldwide inflation and the ever-present risk of an economic recession, the financial environment for biotech has significantly shifted in the opening months of 2022, with valuations plunging and the IPO window closing. The growing difficulty in accessing the public markets may mean more biotechs seek an exit via acquisition.
The industry’s success in staying on track is reflected in its exceptionally strong performance in 2021:
While the number of M&As with announced deal values (57) reached its highest point in at least 15 years in 2021, the total value of those deals (US$65.9 billion) dropped for the second consecutive year and reached its lowest level since 2017.
The falling valuations for biotechs may lead to an uptick in dealmaking, though there is little evidence of this happening so far in 2022.
Alliances continued to play a major role in 2021, with more than US$152 billion in potential deal activity being announced.
Over the two-year period from 2020 to 2021, nearly US$314 billion of biobucks became available to emerging biotechs. With historical alliance ROIs being 33% higher than M&A returns — according to EY research — alliances are likely to continue as a major focus for industry dealmaking.
The multiple uncertainties of the shifting global business climate leave biotech navigating uncharted waters in 2022. Yet the fundamentals of the industry remain strong. Biotech’s growing R&D investments support a rich late-stage clinical pipeline that promises to remain a key driver for the US$1.4 trillion global biopharmaceutical (biopharma) industry.¹ While some biotechs may struggle with reduced access to the public markets, the sector will continue to flourish. Above all, the past five years have delivered an irrefutable lesson in the resilience of biotech: despite these challenges, we can be confident that the industry will continue to stay the course.
¹ The Global Use of Medicines 2022, IQVIA, January 2022.
