Chronicling the market’s rise and fall—and signs of potential recovery.
Following epic capital inflows and stock market outperformance for the biotech sector in 2020, the XBI index subsequently had its steepest and longest decline from early 2021 through 2022. The XBI underperformed the S&P 500 in each of the past two years; something that has not happened since the inception of the index more than 15 years ago.
Much has been written about the reasons for the rise:
Then the drivers of the long hard fall emerged:
Green shoots are providing reason for optimism in 2023 but not for all. Fresh inflation data suggests that inflation may be easing, which may mean the Fed takes its foot off the pedal on rate hikes. Expectations for a more dovish Fed are increasing. This, combined with the potential for a recession and rate cuts later this year, could reverse last year’s trends. Investors may rotate out of value and the economically sensitive sectors right back into growth stocks like biotech.
Large pharma is flush with cash. According to EY’s most recent annual Firepower report, they have, collectively, more than $1.4 trillion to fund M&A and strategic partnerships and collaborations. M&A has always been a core pillar of the leading companies’ growth strategies, and the emerging biotech innovators are their targets.
The growth gap is widening to impact the industry’s leading commercial companies, as they collectively face product exclusivity losses totaling $225 billion in revenues beginning in 2025. Expect a strong year of M&A and dealmaking in 2023.
The IPO market appears to be opening up with several biotechs on the road. If these deals are well received and successfully completed, this could set a much-needed improved tone for the IPO market in 2023.
The XBI hit a high of $99 this year, up over 60% from the lows in May 2022. It has backed off since and is below the high of 174.79 on Feb. 9, 2021. That said, we will continue to see companies fail in bankruptcy. Some are barely hanging on by their fingernails.
Barbara Ryan is the founder of Barbara Ryan Advisors and a member of Pharm Exec’s Editorial Advisory Board.
GSK Acquires Boston Pharmaceuticals’ Novel FGF21 Analog for Steatotic Liver Disease
May 14th 2025Under the agreement, GSK will acquire BP Asset IX, a subsidiary of Boston Pharmaceuticals, for up to $2 billion in total cash consideration, including $1.2 billion upfront and up to $800 million in milestone payments.
GLP-1 Surge Fuels 10.2% Rise in US Prescription Drug Spending in 2024, ASHP Reports
May 13th 2025Weight-loss and diabetes drugs dominated pharmaceutical spending last year, according to a new report by the American Society of Health-System Pharmacists, who warns of tariff-driven supply chain threats and continued growth in clinic drug costs.