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The Drug Delivery Road Gets Tougher

This article was originally published in Start Up

Executive Summary

While making money in drug delivery has always been tougher than its boosters have promised, this year's been ugly in new and disturbing ways. The key lessons of Pfizer's abandonment of inhaled insulin and Impax's patent assault on Endo's Opana are that partners are less reliable; the products need to be medically superior to existing ones, not simply more convenient; and generic companies are making inroads into the main bastion of drug-delivery success -- spec pharma.

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Pharmaceutical/Biotechnology Deal Statistics Quarterly, Q3 2008

Highlights from the Q3 2008 review of pharmaceutical and biotechnology dealmaking: Financing dollar volume was more than twice that of Q2 with 105 deals bringing in over $4.4 billion, but not one IPO to be found. M&A dollars also nearly doubled to $23 billion in the third quarter--versus the previous three months--and of the 26 transactions with known values, more than half were over $100 million. Alliances saw activity focused primarily in two areas: drug delivery and large molecules, each category with 16 deals apiece. Total potential deal value (for the 43 alliances with known values) reached $4.5 billion, over one and a half times that of the previous quarter.

Pharmaceutical/Biotechnology Deal Statistics Quarterly, Q3 2008

Highlights from the Q3 2008 review of pharmaceutical and biotechnology dealmaking: Financing dollar volume was more than twice that of Q2 with 105 deals bringing in over $4.4 billion, but not one IPO to be found. M&A dollars also nearly doubled to $23 billion in the third quarter--versus the previous three months--and of the 26 transactions with known values, more than half were over $100 million. Alliances saw activity focused primarily in two areas: drug delivery and large molecules, each category with 16 deals apiece. Total potential deal value (for the 43 alliances with known values) reached $4.5 billion, over one and a half times that of the previous quarter.

Nanotechnology: A Balm for the Challenges of Drug Delivery

2007 was an awful year for drug delivery companies, and 2008 is shaping up to be no better. The share prices of many drug delivery companies are trading at or below their 10-year averages as investors realize that convenient delivery of large molecules that heretofore required painful injections isn't necessarily a compelling commercial opportunity. Still, intrepid venture capitalists are investing in some companies that are capitalizing on one key difference: these fledgling start-ups use nanotechnology to create therapies that are significantly different--especially in terms of safety and efficacy--from the first-generation drugs they hope to supplant.

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