Partnering and Deal-Making in Pharma through the Pandemic

Report: Partnering and Deal-Making in Pharma through the Pandemic

COVID-19 is affecting the life sciences industry in myriad ways, including short-term disruption to R&D programs and clinical trials, but also causing complications in the commercial arena and to supply chains. This is evident in the near-absence of M&A transactions completed through the first half of the year, although an extremely healthy environment for fundraising via public offerings and venture capital provides balance and opportunity.

In August 2020 Informa Connect and Pharma Intelligence partnered to conduct an online survey to gauge perspectives around deal-making during COVID-19 and the commercial ramifications of the pandemic. This report, based on the responses of 173 executives, business development, and licensing professionals, reveals how partnering discussions have evolved through necessity, and proposes the future direction of deal-making, a strategic imperative for any successful company.

By Daniel Chancellor, Thought Leadership Director at Pharma Intelligence, who also offers insights throughout the report.

Key Insights

The pandemic has had a negative effect on the ability to conduct and execute meetings and deals for approximately half of respondents.
Nevertheless, 90% indicate a strong bias towards virtual interactions in the new normal for deal-making.
Over half think the setting up new partnerships will take longer as a result of the pandemic.

Demographics

Organization

Size of organization

Respondent job function

Regions respondents are based

How has the COVID-19 pandemic affected your ability to execute meetings and deals?

COVID-19 is clearly affecting partnering and deal-making discussions, with around half of respondents conducting fewer meetings and executing fewer deals. This contrasts the small minority – 18% and 11% – who have experienced a pandemic-related boost in their activity. Respondents portray a greater effect – positive or negative – on their meeting activity, but less of an effect on deals. This reflects the fact that timelines can often be lengthy and extend beyond the current duration of the pandemic.

Logistics of Deal-Making during a Pandemic

How do you expect deal-making timelines to change as a result of the pandemic?

The longer the pandemic lasts, the greater its effect on deal-making is likely to become. The majority of respondents – 54% – expect timelines to lengthen as a result of associated social distancing and reduced mobility. Despite the potential benefits of remote interactions, only 16% suggested that these will translate into more rapid negotiations.

What are the biggest benefits associated with remote interactions?

What are the biggest challenges associated with remote interactions?

90% of surveyed deal-makers saw benefits to the transition to remote interactions, citing reduced travel as the most important of these, ahead of reduced costs and greater availability. The lack of personal connection is comfortably the largest barrier to conducting successful virtual discussions, as highlighted by 79% of respondents. This exceeds more practical hurdles such as due diligence, time zones and overcoming technological limitations, while maintaining a healthy work/life balance was also cited by 27%.

How do you expect the typical post-pandemic deal negotiation to be structured?

Despite the challenges associated with virtual deal-making, 90% of respondents will incorporate either a predominantly or entirely virtual structure. The bias towards an entirely virtual structure is strongest in North America, peaking at 47%, suggesting greater acceptability and willingness to engage remotely. As might be expected, cultural preferences in Asia point towards a preference for in-person interactions, as noted by 27% of the participants in this region.