Overview
Introduction
The need to overcome the pharma industrys pipeline productivity crisis is
forcing the genomics innovators and their partners to reshape their portfolio
management. New asset allocation strategies and valuation methodologies are
needed to support the evolution to a new business model emphasizing investment
in technological diversification.
Scope
- Reveals the dynamics of the genomics diversification in accordance with
the evolution of the new bio/pharma supply chain
- Proposes survival strategies for potential postgenomics drug developers
and successful exit strategies for failed genomics businesses
- Introduces novel portfolio management and option based asset valuation to
support postgenomics drug developers, genomics licensees and innovators
Report Highlights
The early wave of the genomics revolution witnessed a spectacular stock value
decline. This was caused by the lack of transparency between the industrys
innovating, investing and licensing arms, and by a high degree of speculation
related to unrealistic market generation targets and lack of understanding of
the technological complexities.
The new wave of innovation is focusing on gene functionalities, population
genomics, chemo- and pharmacogenomics. Drug developers should continue
integrating well-defined genomics assets into their supply chains, work to
maximize successful target validation and optimize alliance networks to ensure
asset co-evolution and diversification.
Conventional discount flow-based asset valuation cannot describe the
complexity of each genomics asset. Therefore, blending quantitative real option
based and qualitative multifactorial asset analysis models can offer flexible
long-term asset allocation and a number of capital growth opportunities hidden
in genomics assets.
Reasons to Purchase
- Understand the dynamics behind the early genomics devaluation, and develop
winning business survival and successful postgenomics exit strategies
- Gain insight into how the new wave of genomics diversification helps the
bio/pharma supply chain to recover from its current productivity crisis
- Improve genomics project valuation by combining novel multidimensional
asset analysis for less supply chain complexity, with real option based
methods
TABLE OF CONTENTS
EXECUTIVE SUMMARY
- Scope and structure
- Facta non verba: stock devaluation of innovative players is unavoidable
when based on speculation
- Well diversified and specialized asset portfolios can enhance value
- Blending options-based asset valuation and unfolding asset complexity
with multifactorial structural modeling offers an alternative methodology
for genomics valuation
CHAPTER 1 THE EVOLUTION OF GENOMICS BUSINESS STRATEGIES
- Introduction
- A rising pipeline productivity crisis
- Transforming the 20th Centurys medicine to 21st Century Biomedicine
- The evolution of the genomics-oriented sector
- The genomics value matrix: evolving towards prosperity
- Two evolution waves: from speculation to depression, realization and
diversification
- The early wave: from speculation to realization
- Key factors that formed the early evolution wave
- Strong R&D investment growth drives expansion
- Business model and supply chain structure highlights US overconfidence
- Patent portfolio formation coupled to poor evaluation drives stock
overvaluation
- Initial genomics-based drug targets provide hope
- The early wave of alliance strategies
- MLNM case study: Genomics assets used to boost integration
- Genomics asset outlicensing
- Using genomics out-licensing to move towards full integration
- Bayer case study: Genomics assets not enough to boost growth
- Genomics licensing strategies
- Failure to capitalize on its genomics deals
- The early wave of M&A strategies
- Merck case study: the acquisition of Rosetta
- Costs and benefits of buying-in genomics expertise
- The new wave of genomics: investing in diversification
- Supporting supply chain integration with diversification
- Adding value through vertical integration - assessing recent deal value
- Accessing the best opportunities: key recommendations for success in
accessing genomics
- Focusing on the quality of the genomics-driven targets
- Co-evolving assets and benchmarking performance against peers
- Tackling supply chain complexity with diversification
- Survival strategies for the horizontal genomics innovators
- Consolidation to diversify - increasing attractiveness
- Optimizing platform development - identifying the best competitive
space
- Exit strategies for failed horizontal genomics innovators
- The case for Hyseq and Variagenics
CHAPTER 2 THE EVOLUTION OF GENOMICS PORTFOLIO VALUATION
- A novel view on the genomics business valuation landscape
- What forces the need for exploring new asset valuation methods?
- Evolving new genomics asset valuation methodologies
- Revealing the role of complexity in genomics business valuation
- Introducing a novel structural model to unfold genomics asset complexity
- Adding more depth to the proposed structural model
- Evolving the comlex dynamic asset structures
- Variation
- Selection and retention
- Evolving hybrid models: real options plus structural equation
CHAPTER 3 APPENDIX
- Key Strategy team members
- Neal Hansen, Lead Analyst-Strategic and Competitive Intelligence
- Alex Pavlou, Senior Biotechnology Analyst-Strategy
- Johannes Inama, Director of Consulting and Strategic Insight
- List of Tables
- Table 1: Early wave results of major collaborations with genomics
companies
- List of Figures
- Figure 1: Datamonitors approach to analyzing the genomics sector
- Figure 2: NDAs and NMEs approved by the FDA (1996 - 2003)
- Figure 3: Datamonitors genomics perceived value matrix
- Figure 4: The evolution of the genomics index share value, January
1999- July 2004
- Figure 5: The evolution of the genomics business models according to
asset and investment growth
- Figure 6: The early wave of the genomics market evolution
- Figure 7: The key elements of the genomics business model evolution
- Figure 8: R&D investment trends of the US publicly traded genomics
sector, 1993-1999
- Figure 9: Geographic distribution of genomics firms
- Figure 10: Genomics patent filing volume trends, 2002
- Figure 11: Key trends from the early wave of genomics alliances
- Figure 12: Development of Millenniums strategic alliances during the
early wave of alliances
- Figure 13: Bayers genomics and genomics-related agreements
- Figure 14: In 2010, Bayer is forecast to derive 71.8% of sales from
mature drugs
- Figure 15: Datamonitors genomics Index for the new wave of innovation,
2002-04
- Figure 16: The new wave of genomics assets and their contribution to the
bio/pharma supply chain
- Figure 17: Adding value through vertical integration: analysis of 12
recent genomics alliances by value
- Figure 18: Key trends extracted from the new wave of alliances
- Figure 19: Key trends extracted from the new wave of genomics M&A
deals
- Figure 20: Key extracted trends from the new wave of chemogenomics
alliances
- Figure 21: Key extracted trends from the new wave of pharmacogen-omics/enetics
alliances
- Figure 22: How realization and integration moves closer to
capitalization
- Figure 23: Nuvelos (merger of Hyseq and Variagenics) historical share
prices 1999-2004
- Figure 24: A generalized view on the genomics business landscape
- Figure 25: Schematic representation of the main biotech asset valuation
methods according to their ability to extract critical asset information
for high ROI and the size of risk tolerability that they can undertake
- Figure 26: Real options decision making in genomics value chain
- Figure 27: Datamonitors multidimensional approach in revealing the key
elements that govern the valuation of each genomic asset.
- Figure 28: Increasing depth in the asset valuation model using a number
of sub-elements to support the basic ten-elements structural model of
Datamonitors genomics success index
- Figure 29: Applying variation in genomics assets evolution to achieve
high ROI
- Figure 30: Applying variation in genomics assets evolution to achieve
high ROI
- Figure 31: The dynamics of biotech innovation: from a tendency towards
high-ROI asset clusters within the biotech business model to the formation
of biotech company clusters
- Figure 32: Evolving the "fittest" assets or identify your
competitors advantages
- Figure 33: Datamonitors genomics success index linked to real option
methodology
- Figure 34: Evaluation of each stage of the option decision process
during a genomics-driven drug development project
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