3i says Healthcare CEOs optimistic - Investment in Healthcare Market to Take Off Again in 2004

Europe’s top Healthcare, Biotechnology and Pharmaceutical give insider insight on industry issues at annual 3i Healthcare CEO conference:

• Healthcare IPOs to return in 2004 in Europe    
• Clinical trials must be changed
• An aging global population will help grow the sector   
• SARS or Bio-Terrorism not believed to impact the industry
  

A poll of Chief Executive Officers (CEOs) from healthcare and biotechnology companies from around Europe and the US at the annual 3i Healthcare event in Barcelona, saw half of the senior decision makers looking forward to an upturn in investment activity. The 101 top-level delegates voted on a number of industry issues that, for example, showed half believe the IPO (Initial Public Offering) window will re-open again in the Europe during 2004.

Future Investment Outlook
Despite the recent downturn in the market, CEOs are optimistic about the future for investment in healthcare companies. 50% of companies think that 2004 is the kick off for companies to float, whilst 40% see the opportunity in arising in 2005.  Of the 101 delegates only 15.52% believed that this could be as soon as the first half of 2004, the remaining 34.48% felt that the latter half of the year was more realistic.

Clinical Trials
Clinical trials proved to be a contentious issue, as nearly 80% of delegates questioned believe that the present system of clinical and pre-clinical testing needs revision.  12% within that figure felt that it was time to scrap the rules and start again against the 13% who felt entirely happy with existing regulations.

Growth Areas
Recent developments of the last 12 months, such as emerging diseases (for example SARS or West Nile) and bio-terrorism were not seen as significant growth opportunities by healthcare and biotechnology organisations. Over 90% of companies do not view research and development into new diseases as a focus for growth, whilst a third of delegates view bio-terrorism as a specialist niche area.

In fact, the most significant growth area seen is the long-term trend of an aging global population. Over 70% of delegates agreed that the increased number of elderly people needing prolonged care is the main driving force in the medical devices sector.

Jo Taylor, Director and Head of Technology for 3i in the UK said: “We expect to see increased investment in the healthcare and biotechnology industry over the next three years, innovation will continue to fuel the sector and provide new opportunities for the market. In particular, smaller niche players have the flexibility to be innovative, whilst pricing pressure is also focusing corporates to invest in new products and devices that can offer a cost-effective solution. 3i believes partnerships between small specialists and major corporates will ultimately benefit the marketplace, by stimulating business, and the consumers, who will receive improved service and new products.”

John Norris, CEO of Coprindm and ex-Deputy Chief of the US Food & Drug Administration (FDA), a keynote speaker at the event, added, “The US is currently seeing Healthcare IPOs at the rate of one a week and going by previous history this would indicate that Europe will have followed within 18 months.” 

-Ends-

For further information, contact:
Andy Rogers
Tel : 0207 386 6200
Email : 3i@brands2life.com 

 
3i brings capital, knowledge and connections to the creation and development of businesses around the world. It invests in a wide range of opportunities from start-ups to buy-outs and buy-ins, focusing on businesses with high growth potential and strong management.

3i invests in businesses across three continents through local investment teams in Europe, Asia Pacific and the USA. To date, 3i has invested over £15 billion (including co-investment funds).  In the 12 months to 31st March 2003 an average of £3.7 million (including co-investment funds) was invested each working day. 3i’s current portfolio is valued at almost £4 billion.

Results of the Healthcare Poll follow:
Results of electronic poll of 101 European and US CEOs and other executive officers.
Statistics prepared by IESE Business School, Barcelona, October 2003.

Question 1. When do you think the IPO window will open again? = Percentage
a. 2003 = None
b. first half of 2004 = 16
c. second of half 2004 = 34
d. 2005 = 40
e. 2006 = 10

Question 2. When do you expect your business to be profitable? = Percentage
a. it is now = 22
b. 1 - 2 years = 30
c. 3 - 5 years = 43
d. 6 - 10 years = 5

Question 3. Is the healthcare market more difficult today than one year ago? = Percentage
a. yes = 42
b. no = 27
c. the same = 31

Question 4. Have you changed your business model because of the change in the funding environment? = Percentage
a. yes = 67
b. no = 33

Question 4a. If yes, which business model are you following? = Percentage
a. service provider = 17
b. product development = 33
c. dual business model = 50

Question 4b. If no, is your current model?       = Percentage
a. service provider = 14
b. product development = 57
c. dual business model = 29

Question 5a. How well do you understand what your existing / potential pharma partners require from a relationship agreement? = Percentage

a. very well = 67
b. you are surprised sometimes = 31
c. it’s a black hole = 2

Question 5b. If you are from a pharma company, how well do biotechnology companies understand you? = Percentage
a. very well = 73
b. surprised sometimes = 20
c. not very well = 7

Question 6. Do you believe current systems of clinical and preclinical testing in the US and Europe? = Percentage
a. need to be fully revised = 12
b. need partial revision = 67
c. are correct = 13
d. no opinion = 9

Question 7. Is the ageing population driving the medical device sector? = Percentage
a. not at all = 7
b. very little = 22
c. very much = 71

Question 8. Are emerging diseases providing a stimulus for growth in your business? = Percentage
a. not at all = 53
b. a little = 38
c. very much = 8

Question 9. Are bio-terrorism contracts a significant factor in your business? = Percentage
a. my company is in some way involved = 5
b. it is a new force in our sector = 8
c. niche area = 70
d. not considered it = 17