Financial Analysis

Anticipating Year-End . . .

By Michael A. Martorelli | September 7, 2011

. . . and some important questions we’ll all be discussing.

The FDA has approved as many NMEs (21) in the first seven months of 2011 as in all of 2010. At the end of the year,


  • will we be discussing the agency’s record-breaking number of NME approvals for the full year,
  • and anticipating another record-breaking number of NME approvals in 2012,
  • or suggesting the 2011 experience was just an aberration?


So far, 2011 has seen an unusually high number of large acquisitions in the CRO space. At the end of the year, 


  • will we be discussing additional large-scale transactions announced during the second half,
  • and predicting that acquisition trend will continue in 2012,
  • or suggesting that the majority of the large deals that can be done have already been completed?


Many sources have noted the high level of M&A activity among drug and biotechnology companies during the first half of 2011. At the end of the year,

  • will we be discussing a record-breaking number of such transactions, along with their upfront transaction values,
  • and anticipating more of the same (numbers of transactions and transaction values) in 2012,
  • or suggesting that the M&A trend among drug development firms has peaked?

Datamonitor believes the worldwide market for biosimilars was about $250 million in 2010; that firm believes the market could be closer to $3.7 billion by 2015. At the end of the year,


  • will we be praising the FDA’s approval pathway for such products,
  • and discussing the prospects for lots of incremental business for the outsourcing community in 2012 and beyond,
  • or discussing the roadblocks the FDA is putting in the path of a domestic biosimilars market?


Most outsourcing firms have reported reasonably strong financial results for the first half of 2011. At the end of the year,


  • will we be hearing analysts’ forecasts of strong revenue and earnings gains for the full year 2011,
  • and hearing them project even strong gains in 2012,
  • or worrying about the longevity of the recent growth and profit trends? 

There are probably other questions surrounding drug development and outsourcing that we will be considering just three months from now. I encourage readers to send me their own suggestions at the e-mail address below.

In closing, I must also note one gigantic political question that readers will also be discussing as 2011 morphs into 2012: 


  • will the recommendations of the Super Committee of 12 representatives and senators offer a legitimate pathway to fixing the country’s budget problems;
  • or raise the specter of the draconian budget cuts envisioned in the absence of Congressional approval of the Committee’s recommendations?


Here’s hoping a satisfactory answer to the last question will let us breathe a collective sigh of relief. We have enough questions to worry about in our own (not so) little corner of the Contract Pharma world. 


Michael A. Martorelli is a Director at the investment banking firm Fairmount Partners. For additional commentary on the topics covered in this column, please contact him at, or at Tel: (610) 260-6232; Fax (610) 260-6285.