By Patrik Frei, CEO, Venture Valuation
The recent acquisition of Forest Laboratories Inc. by Actavis for 25 billion USD shows the trend of generic producers moving into the innovative drug space; with fewer blockbusters on the market, companies focused on generics will need to move into innovative therapeutics.
The acquisition of Forest Laboratories Inc. by Actavis is indicative of where we may see much future growth of generic companies – namely, patented innovation. Such projects can either be generated in-house or through licensing / M&A of innovative emerging biotech companies. Through the extension of the business model of generic companies, they will be able to control the whole life cycle of drugs from the patent protection into the generic phase. Novartis actually implemented this approach many years ago with the purchase of Hexal and Eon Labs, which later became Sandoz. However, it is now evident that generic companies are going the opposite direction from generic to innovation. This makes sense, as generic companies are in an increasingly attractive market position, and have the revenues to support significant licensing activities.
The same trend is not limited to the US and EU. It is also visible in Asia where many generic companies are based. Based on our own analysis, the demand in Asia is led by China, followed by South Korea. About a third of the companies that are seeking in-licensing opportunities in Asia focus on oncology followed by metabolic diseases. In terms of stage, over half are looking for pre-clinical products and about a quarter for clinical stage products. LSN and Venture Valuation track this activity on a global basis, and as this trend develops, we will keep you up to date on how this emerging category is changing the landscape for emerging biotechs around the world.
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