Financial News Media

According to BIOPROCESS ONLINE, there are three key themes in 2023 that are likely to have an outsized impact on the business decisions of life sciences leaders:

• Changes in interest rates by the Federal Reserve will impact investors’ risk appetite and the valuations that companies can expect in public and private markets.
• Labor will continue to be a challenge, but deeper struggles in other industries will
  present opportunities.
• The increase in competition from biosimilars and bioequivalents will force companies to
  write new playbooks for defending their incumbent drugs and the success, or failure, of
  those strategies will create the landscape for investment in biologics for years to come.

RBC Capital Markets added: “Major clinical catalysts finally started to go positively, reminding investors that the previous onslaught of clinical trial and regulatory setbacks likely stemmed from expanded numbers of unproven early-stage recent IPO names, rather than any intrinsic changes in the risk profiles of more established biotech companies. Commercial performance also continued to outperform expectations, highlighting biotech’s relative insulation from inflation and recession concerns.

RBC continued: “We expect even better performance for higher quality, catalyst-driven small and mid-cap companies as 2023 progresses. Smaller cap biotechs, while rebounding modestly off of mid-year lows, have still meaningfully underperformed large and mid-cap biotechs, pharma and the S&P, with a more challenging capital environment forcing greater dilution and program deprioritizations.

However, the market has rewarded – and should continue to reward – shares when key derisking catalysts provide visibility to large future market opportunities. As such, we believe there are select, high-quality, catalyst-driven smaller-cap companies which remain underappreciated and should perform well in 2023, helped by increasing regulatory permissiveness in key areas of innovation and M&A, even if restructuring and dilution among weaker stories limits overall index performance.”