PHILADELPHIA – Biotechnology is in a good place right now. Coming off a record 2014 the factors that contributed to the sector’s stunning performance still remain firmly in place. Two reports presented at the BIO 2015 International Convention reinforce that view.

EvaluatePharma’s World Preview 2015, from life science market intelligence firm Evaluate Ltd., finds that the biopharmaceutical industry is set for sustained growth with prescription drug sales growing at a predicted 5 percent per year through 2020. The bullish outlook for biotech was also a central theme in EY’s presentation of its 29th annual biotechnology industry report: Beyond borders: Reaching new heights. Analysts noted, however, that the optimism sparked by a “new age of biotech innovation” should be balanced with the headwinds that could lie ahead, including pricing pressures and increased competition, particularly from biosimilars.

GOOD NEWS STORY

Following on from last year’s report, Evaluate predicts that by the year 2020, world prescription drug sales, based on consensus forecasts for the leading 500 pharmaceutical and biotechnology companies, will grow by a robust 4.8 percent per year (CAGR) to reach $987 billion by 2020.

According to Evaluate’s head of research, Anthony Raeside, that projection comes in at $30 billion lower than what was predicted in last year’s edition. (See BioWorld Today, June 25, 2014.)

The slightly lower forecast is primarily due to the depreciation of the euro against the dollar that occurred at the end of 2014.

Nevertheless, the sector’s prospects remains one of “good news,” with sustained and robust growth ahead, Raeside explained at a press conference to release the findings of the report.

Several factors are contributing to the positive outlook, including a record-breaking number of new drug approvals, a very healthy and expanding product pipeline and dramatically improved research and development productivity.

The analysis found that the total value of the industry’s R&D pipeline increased 18 percent in 2014 to $492.8 billion from $418.5 billion, driven by the record-breaking number of FDA drug approvals last year, eight of which are forecast to have sales of more than $1 billion five years after launch.

Global pharmaceutical R&D spending is forecast to grow by 2 percent (CAGR) to $160 billion in 2020, from $141.6 billion in 2014.

Among the other findings in the report:

Novartis AG will remain the number one pharmaceutical company through 2020, with total prescription drug sales of $53.3 billion, which represents a 5.4 percent share of the entire world market. Thanks to its acquisition of Allergan plc by Dublin-based Actavis plc (now rebranded as Allergan), that firm’s prescription drug sales are forecast to almost triple between 2014 and 2020 to $28.4 billion. Celgene Corp. is forecast to make its debut in the top 20 list by 2020, with cancer therapeutic Revlimid (lenalidomide) and immunosuppressant Otezla (apremilast) adding a combined $6.6 billion to its 2020 prescription drug sales.

Humira (adalimumab, Abbvie Inc.) will remain the world’s best-selling therapeutic product in 2020, with sales of almost $14 billion. According to Raeside, Wall Street expects sales to hold up well against strong biosimilar headwinds. Opdivo (nivolumab), Bristol-Myers Squibb Co.’s anti-PD-1 monoclonal antibody, will vault into the third spot by 2020, just behind Revlimid.

UNPRECEDENTED GLOBAL GROWTH

The EY report confirmed that 2014 was a phenomenal year and many of the trends that contributed to that have continued unabated into this year. The report found the global biotechnology industry set records on virtually every major financial metric, including revenues, profitability and capital raised. Those significant performance indicators, combined with several high-profile product successes and a strong year for new drug approvals, helped drive the industry’s collective market capitalization above $1 trillion for the first time in its history.

What was surprising about the results is that they turned out stronger than expected, Glen Giovannetti, EY’s Global Life Sciences leader, told BioWorld Insight.

This time around the industry’s performance has been driven by a record number of product approvals and company performance, unlike earlier boom cycles that were mainly fueled by biotech’s promise and very little substance, he noted. Investors have handsomely rewarded the sector’s achievements.

One of the key findings was that companies in the industry’s established biotech centers (U.S., Europe, Canada and Australia) generated revenues of $123 billion, a 24 percent increase over 2013, and a new high. Excluding the unprecedented growth of Gilead Sciences Inc., revenues in 2014 would have increased a healthy 12 percent.

In addition, net income reached a historic high of $14.9 billion, a 231 percent increase from the prior year, with a significant proportion of that total attributable to Gilead. Even factoring out that firm’s results, the overall net income for the industry still doubled, driven by solid sales of newly launched products.