Back Bay Biopharma Confidence Index

Years past brought “bubbles” in biopharma. Our view, shared by most, is that biopharma as an industry has evolved so substantially that even with economic vagaries and political tumult, that we are here to stay—robust, and vital to the world’s health and the world’s economy.With that said, it is important to track the tides of expectations and sentiment as these non-quantifiable entities still have a major role in corporate actions.

In investment and capital budget decisions, understanding institutional and decision-maker confidence and risk tolerance is critical.  In investment terminology, this is called behavioral finance and managerial economics.  From a Socratic perspective, it translates to “know thyself.”

In a new survey of Life Science Decision Makers, Back Bay found an interesting dichotomy between strongly positive views on strategic deal activity and new drug approvals and negative views on drug pricing and reimbursement. Decision-makers feel quite confident about what is going on in the lab and clinic, as well as in strategic discussions, but have much less confidence about what is going to happen in Washington DC (only 5% of respondents were positive).

This dichotomy plays into budgeting, forecasting and valuation in many ways.  The split between confidence in scientists/colleagues and politicians/regulators may seem obvious, but refining modeling assumptions, drug and business development dialogues and goals is more nuanced.

It is reassuring to find confidence in technologies’ growth. That remains the reason biopharma remains a robust sector, even when slowed by hesitancy due to economic and political vagaries. We will re-survey the same group of decision-makers in early fall, and again pre-JPMorgan.  Our goal is to use this data to create a Life Sciences Confidence Index.  From our perspective, we are very interested in seeing how these perceptions and metrics shift and how that can track to deal and strategic growth activities in real time.Thank you to the survey participants, and we hope this information is useful to you.