2. Within Healthcare, Slowing Revenue Outlook For Nearly Every Subsector
(1)
Change in CAGR
22%
Generics
19% -
20%
Managed Care
5% -
19%
Healthcare IT
25% +
18%
CROs
4% -
17%
Biotech
8% -
16%
MedTech
6% -
14%
Specialty Pharma
16% +
12%
Supply Chain
8% -
11%
Facilities
8% -
7%
Life Science Tools
4% -
5%
Major Pharma
1% -
0% 5% 10% 15% 20% 25% 30%
2004-2008 Revenue CAGR 2008-2012 Revenue CAGR
1 Source: Wall Street Research.
(1) Represents growth trend when comparing periods 2004-2008 to 2008-2012.
3. Declining R&D Productivity
NME approval peaked in the mid 1990’s, followed by a period of decline starting around 2000; while R&D
spend continued to grow.
$50 60
45
In du stry R & D S pe nd ( $ bn )
50
40
35
F D A N M E A pp ro va ls
40
30
25 30
20
20
15
(1)
10
10
5
0 0
1970 1975 1980 1985 1990 1995 2000 2005
Number of FDA NME Approvals
2 Source: Rodney Zenmmel, PhD., McKinsey & Company, FDA, PhRMA.
(1) Includes NCEs and BLAs. BLAs included 1986 onward; biologic approvals in prior years assumed negligible.
4. Life Science IPOs Since 2003
The financial crisis clearly impacted the biotech IPO market as volumes are off significantly over the past
few years. Valuations continue to be challenged as does the short term aftermarket performance.
# of Biotech IPOs Per Year Since 2003 Average Performance Offer + 30 Days
8.8% 7.3%
21
19
0.1% N/A 0.8% N/A
14
(5.5%) (4.0%)
10 (9.1%)
9
7
6
1 1
0
(31.5%)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Dealogic. Excludes offerings < $25 mm in proceeds. Source: Dealogic. Excludes offerings < $25 mm in proceeds.
Average Market Cap At Pricing Over Last Ten Years Average Offering Size Over Last Ten Years
$273 $279 $278 $285
$260 $78
$72
$65 $66 $68 $65
$213 $207 $62
$202
$55
$52
$157
N/A N/A
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Dealogic. Excludes offerings < $25 mm in proceeds. Source: Dealogic. Excludes offerings < $25 mm in proceeds.
3
5. Life Science IPOs (Cont’d)
The majority of IPOs continue to be priced below the marketing ranges, with particular valuation sensitivity
experienced over the past 2 years. Later stage assets are dominating the IPO landscape currently.
Above / Below / Within Range Average File-to-Offer (%) Per Year
10% 10% 5%
14% N/A N/A
16%
19% 36%
(8%) (9%)
40%
(14%)
100% 100% 100% 100% (19%)
79% 86%
71%
64% (27%) (27%)
50%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (43%)
(46%)
Below Within Range Above 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Dealogic. Excludes offerings < $25 mm in proceeds. Source: Dealogic. Excludes offerings < $25 mm in proceeds.
Clinical Stage at IPO Since 2003 NBI Annual Performance Over Last Ten Years
46%
1
5
12 2 16% 15%
5 12%
1 5 6% 5%
1 3%
4 1 1%
6 2 9 6 8
6 6
2 3
1 1 1
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (13%)
2003 2004 2005 2006 2007 2008 2009 2010 2011
I or Pre-Clinical II III or NDA Filed Commercial
Source: SEC filings. Source: Factset.
4
6. Life Science FOs Since 2003
Although the biotech follow-on market has experienced strong volume, deal size has declined in recent
years as has the market cap of the average issuer. Follow-ons have tended to perform well in aftermarket.
# of Biotech Follow-Ons Per Year Since 2003 Average Performance Offer + 30 Days
17.7%
49 49
45
43 42
40
36
33
8.6%
5.6% 6.1%
14
4.3% 4.4% 3.9%
7 2.2% 2.6%
N/A
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Dealogic. Excludes offerings < $25 mm in proceeds. Source: Dealogic. Excludes offerings < $25 mm in proceeds.
Average Market Cap At Pricing Over Last Ten Years Average Offering Size Over Last Ten Years
$1852
$156 $154 $158
$1466 $1500
$130
$94 $94 $95 $94
$837 $879
$74
$582 $641 $610 $60
$559
$353
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Dealogic. Excludes offerings < $25 mm in proceeds. Source: Dealogic. Excludes offerings < $25 mm in proceeds.
5
7. Life Science M&A Transactions: 2007 – 2012 YTD
M&A over the past 5 years highlighted important trends, including pharma’s need for greater access to
antibody platforms, larger biopharmas buying their partners, and pharma’s need for enhanced pipelines.
Public and Private Life Science Acquisitions, 2007-2012 YTD
(total transaction value in billions of USD, # of transactions)
$300 40
35
250
$228
8 30
Transaction Value ($bn)
200
25
# Transactions
150 20
220 15
100
$83
$71
10
11 31
$48 $47
50 2
12 5
59 52
36 45
0 0
-
2007 -
2008 -
2009 -
2010 2011-- YTD
Public Acquisitions Private Acquisitions Total # Acquisitions # Public Acquisitions # Private Acquisitions
6 Source: MergerMarket, EvaluatePharma, Company information.
Note: Public and Private transaction values include earn-outs and CVRs.
