Axios Pro Exclusive Content

THL is bullish on biopharma

Illustration of the Wall Street bull wearing a stethoscope.

Illustration: Aïda Amer/Axios

THL is bullish on biopharma investing, betting that a surge of new drug approvals will offset the biotech funding slowdown of last year, per a recent report from the firm.

Why it matters: The biopharma sector is primed for an active year and an area that is becoming increasingly attractive for sponsors — which wasn't always the case.

The big picture: Loss of exclusivity on blockbuster drugs will impact pharma revenue significantly, with sales expected to dip by 46% for some of the largest industry players over the next decade.

Yes, but: The industry has seen a recent spike in the development and approval of new drugs, particularly complex therapeutics.

  • In 2022, the U.S. FDA approved 37 new drugs — the lowest number of approvals in five years.
  • As of Dec. 20, 2023, the FDA had approved 546 new molecular entities and new therapeutic biological products as well as 207 vaccines, allergenic products, and cell and gene therapies, per the report.
  • The cell and gene therapy market is projected to grow at a 60% CAGR through 2026, says THL head of health care Josh Nelson.

What they're saying: THL has spent years developing relationships in biopharma, Nelson tells Aaron.

  • "Providing the infrastructure to support the full lifecycle — from discovery to trial to delivery — will be critical," he says.
  • Drug discovery and development requires tools and technology to optimize resources and navigate the regulatory and commercial landscape, he says.
  • "That's where a sophisticated investor can add real value," Nelson adds.
  • He notes that the sector's increasing maturity has created an attractive ecosystem of growth companies with large addressable markets and durable business models that serve the biopharma market.

Plus: "The rising popularity of new classes of biologics like weight loss drugs in the GLP-1 class and the expansion of indications for drugs like Keytruda show that there is still tremendous opportunity in the pharmaceuticals and biologics sector," writes THL managing director Megan Preiner.

  • "The complexity across the value chain creates huge opportunities for investment," she writes.

The bottom line: The rapidly shifting health care landscape has had a profound impact on the private equity deal environment.

Go deeper