Biopharma CEO confidence levels wavering

19-Feb-2016 - Last updated on 22-Feb-2016 at 14:20 GMT

The largest risks to biopharma companies is capital stability and clinical results. (Image: iStock)

While Bioparma CEOs remain confident in the industry as a whole, uncertainties still abound.

According to the report, released by Kineticos, 100% of biopharma CEOs are confident in their companies and the industry overall. However, 41% of respondents indicated that the largest risk to their companies is capital stability and 33% cited clinical results.

“Confidence amongst biopharma CEOs had indeed slipped since the 2015 Q3 data was released, specifically when referring to the ability to raise capital and the current deal landscape,” Kevin Hampton from Kineticos told us.

The survey, which was conducted in December 2015 and the first two weeks of 2016, was likely influenced by the decline in capital markets.

As an example, the S&P Biotech ETF XBI – the broadest measure of emerging biopharma capital markets – dropped by 39.5% in the first two weeks of January, from 90.5 in July 2015 to 54.74.

“For those that may have expected a decline in confidence more aligned with the declining capital markets, it was likely a pleasant surprise to see CEO confidence being replaced with uncertainty, and not fear,” said Hampton.

Confidence in the ability to raise capital in the next 18 months, specifically, declined from 53% in Q3 to 39% in Q4. CEOs who viewed the current deal landscape as good also declined from 82% in Q3 to 61% in Q4.

"It's too early to call this slip in CEO confidence a trend, but as we know from the last significant market contraction in 2009, development stage company fortunes are inextricably tied to the cycle of the global financial markets,” said Steve Girling, President of Ipsos Healthcare.

However, CEOs still remain confident in their ability to deliver therapies in three to five years (91%).

"CEOs, particularly ones that manage emerging biopharmaceutical companies, must have a long term perspective,” said Shailesh Maingi, CEO and Founder of Kineticos.

Additionally, the index asked CEOs about their outsourcing plans. Currently, three out of four CEOs outsource the majority of their clinical development functions – 56% outsourced 75-100% of their clinical studies, up from 39% in Q3.

“The therapies being developed today for oncology, CNS, and immunology diseases reflect the promise of immuno-oncology, gene/cell therapy, pharmacogenomics, and other new technologies,” added Maingi. “Our confidence index reflects the optimism that biopharma CEOs have over the longer term, albeit at a level lower than a few months ago."