Specialization Spurs Evolving Biopharma Landscape

Baird Capital Continues to Invest in Global Biopharmaceutical Market, acquiring interest in global product strategy firm Prescient Healthcare Group

The global biopharmaceutical market has experienced significant change over the last decade, with the focus of research and development (R&D) shifting towards specialty therapy areas given higher levels of patient unmet medical need and the identification of discreet patient populations. Confronted with increasing generic and biosimilar competition to former blockbuster drugs following a sweeping wave of patent expiries, greater payer pressure and higher regulatory hurdles, biopharmaceutical manufacturers are turning to specialty therapy areas for a higher certainty of commercial success. Despite the continued advancement of global biopharmaceutical assets into late-stage pipelines, there remains a stark contrast between declining forecast peak sales and growing asset development expenses. According to a Deloitte multi-year survey conducted across 12 leading biopharmaceutical players, forecast peak sales per asset declined by almost 50% from 2010 to 2015, despite that fact that average development costs increased by a third. While growth in R&D spend remains consistent, the aforementioned market characteristics are making it harder and harder to generate suitable returns.1

To address the challenges that lie ahead, biopharmaceutical companies must embrace forward-thinking and cross-functional collaboration throughout corporate, portfolio, clinical development, go-to-market and lifecycle management planning and execution processes. Developing targeted and distinguished clinical and commercial value propositions is more vital than ever, and investing heavily in sales and marketing will no longer suffice. The enhanced clinical, health economic and societal benefit of the brand over current standard of care must be pronounced. In addition, as biopharmaceutical manufacturers strive to replace revenue lost from patent expirations with new drugs, industry R&D focus has been shifting towards specialty therapy areas given higher levels of patient unmet medical need and identification of discreet patient populations. In order to differentiate, biopharmaceutical firms are spending more on innovation and market strategy focused on niche solutions serving increasingly targeted patient populations.2

Worldwide Total Pharmaceutical R&D Spend in 2008-20223

Pharmaceutical R&D Spend

Amidst these rapid developments in the biopharmaceutical industry, Baird Capital has a history of partnering with innovative businesses capable of addressing pressing market needs. Our geographically diverse experience includes partnerships across various investment stages, from early-stage biotechnology platforms to more mature consultancies.

In 2006, we invested in Campbell Alliance, a North Carolina-based biopharmaceutical consulting firm providing counsel on commercial and R&D strategy development and internal operations improvement. Campbell’s clients include leading pharmaceutical and biotech companies as well as hundreds of emerging and midsize firms located throughout North America, Europe, Japan and elsewhere. During our investment period, we assisted Campbell in scaling their operations, recruiting top talent and expanding geographically before ultimately exiting to inVentiv Health, a global contract research organization ("CRO"), in 2011. In 2008, we invested in China-headquartered Frontage Laboratories, which enabled us to leverage the value of our global platform and capitalize on advancements in biotechnology in the Asia-Pacific region. Frontage, a leading CRO with facilities in Shanghai as well as the US, provides research services to facilitate pharmaceutical discovery, development and commercialization for large and emerging pharmaceutical and biotechnology companies. Baird Capital assisted Frontage in scaling its global platform before Frontage was acquired in 2015 by Hangzhou Tigermed, a leading provider of outsourced clinical development services.

Baird Capital has also made several early-stage growth equity investments in the life sciences space. Nicole Walker, a Partner in Baird Capital's Venture Capital team, is currently leading two primary strategies that we have developed over several years. Our first proactive thesis is focused on outsourced pharma services where pharma is the client. This thesis, predicated on our understanding of how development and commercial teams in large pharma make decisions and our ability to enable access to touch points within those organizations, has resulted in investments in MI Bioresearch and Strata Oncology. Our second proactive thesis, which has been driven by our extensive knowledge of disease areas such as oncology and immunology, is focused on diagnostic tools that enable better therapeutic decisions by clinicians. Examples of our investments in this area include GenomeDx, Integrated Diagnostics, NeuMoDx Molecular, NimbleGen and Accuri Cytometers.

Baird Capital Invests in Global Consultancy Prescient Healthcare Group

Baird Capital’s most recent life sciences investment came in July 2017, when we acquired a significant interest in Prescient Healthcare Group ("Prescient, or the "Company"), a leading product strategy consultancy to the global biopharmaceutical industry. Founded in 2007, Prescient is headquartered in London with additional offices in New York, San Francisco, New Delhi and Beijing. The Company provides product strategy services to help its clients make better clinical and commercial decisions, resulting in enhanced outcomes for patients, customers and shareholders. Prescient has established a deep and broad stable of clients, partnering with 20 of the world’s 25 largest biopharmaceutical companies, as well as a growing number of emerging biotech and specialty pharmaceutical organizations.

Prescient partners with biopharma players seeking to develop targeted and differentiated clinical and commercial value propositions, to analyze what benefit their assets and brands will need to demonstrate at key inflection points throughout the lifecycle and the resultant strategies required to achieve success.

Prescient provides expert-led and evidence-based decision support to client functions involved in new product, brand and mature brand planning. Prescient does this by successfully integrating clinical, commercial, business intelligence (competitive intelligence and market research) and forecasting expertise to profile future market dynamics and identify critical developmental and commercial success factors. Importantly, Prescient’s offering is truly global, with about 65% of engagements being focused on the mature markets of North America, Europe and Japan, and the remaining 35% helping clients realize opportunities in the emerging markets of APAC, LATAM and EMEA. As well as supporting innovative products in oncology, immunology, cardiology, neurology and infectious diseases, Prescient offers deep expertise in biosimilars, generics, vaccines and rare diseases.

Prescient

Prescient

As Prescient continues to address the dynamic needs of the biopharmaceutical industry through its highly specialized consultants and defined and differentiated portfolio of services, Baird Capital will leverage our in-house operational resources and global platform across the US, UK, Europe and Asia to support Prescient’s continued pursuit of international growth opportunities. According to Baird Capital Partner Andrew Ferguson, "The Prescient team has built a fantastic business that day-in and day-out supports blue-chip clients with the insight and analysis they need to make business-critical decisions. Prescient’s commitment to delivering a top-quality service has resulted in a loyal and fast-growing customer base. The market for the company’s services is set to continue to grow strongly as biopharmaceutical companies seek to develop and market products in a cost- and time-effective way. Our investment and global resources will help further accelerate Prescient’s growth and we look forward to partnering with the team in an exciting future for the business."

Prescient CEO Jamie Denison-Pender also expressed excitement upon the recent transaction closing: "We are thrilled to be partnering with Baird Capital, which has an extensive track record of helping people-based businesses grow across the healthcare sector. Baird’s global resources, experience in scaling professional services organizations and focus on talent development will be critical as Prescient enters its next stage of growth. Prescient has an incredibly loyal customer base and this deal will enable us to continue enhancing the level and value of service we offer our clients."

John DiGiovanni is a Principal at Baird Capital, the global direct private investment arm of Robert W. Baird & Co. Incorporated. Andrew Ferguson is a Partner with Baird Capital. Both team members are based in London. Baird Capital Partners Europe Limited is authorized and regulated by the Financial Conduct Authority (registered number 150154).

1 Source: Deloitte Centre for Health Solutions, 2015.
2 Source: Results Healthcare, http://resultshealthcare.com/.
3 Source: Evaluate Pharma, World Preview 2016.