Leadership Matters

Perspectives on the key issues impacting senior leaders and their organizations
November 24, 2021

Lessons from the Jefferies London Healthcare Conference 2021

Spencer Stuart participated in the 2021 Jefferies London Healthcare Conference. Here we share our observations on the issues facing leaders in the healthcare/biopharma sectors.

The COVID-19 pandemic has transformed business models with the growth of mRNA vaccine platforms and telehealth, while skewing other segments, such as CROs that have had abnormally high earnings. Some of these changes are likely to endure, such as people seeking more treatment remotely, while the focus on environmental, social, and governance issues (for example institutional investors mandating equal access to life-saving medicines) have led to greater scrutiny of business models across the healthcare ecosystem.

The availability of vast amounts of capital is part of the reason why valuations and multiples have reached an all-time high, especially with private biotechs. However, whilst biotechs have attracted significant funding, their valuations are being questioned in relation to those of Big Pharma, whose pipelines are full and nearing launch in many cases.

The investors and businesses we spent time with at the conference were unanimous in their belief that the most significant differentiator when selecting investments is having a clear understanding of the motivations and leadership capabilities of the board and management team.

Biopharma observations

In the private biotech market, we see huge amounts of capital and the formation of unlimited companies, although there may be a slowdown in the rate of crossovers and IPOs. Biotech stocks have been falling since their peak in February of this year as investors have rotated from growth to value. Certain large pharma stocks have outperformed the broader indices. While companies have continued to invest in oncology therapeutics there is a growing question mark over the pricing around speciality and rare therapeutics. Do we have overcrowding in the cell and gene therapy arenas?

We see broad categories of ‘innovators’, ‘aggregators’ and ‘strategic buyers’ emerging. Innovative biotech companies are focused largely on new modality therapeutics in the cell and gene therapy ecosystem, although pricing and reimbursement for such highly priced medicines is a hot topic with disruptive businesses set to change the landscape (e.g. EQRx). New types of aggregators have emerged, combining assets, platforms and people under one umbrella. There is a lot of money chasing fewer assets, leading everyone to wonder if the bar on investments has lowered. We have seen more diversity among strategic buyers, especially from non-healthcare businesses looking to participate in the healthcare profit pool. Changes in government compliance policies relating to foreign investments has increased acquisition timelines from three to nine months, which has helped other buyers such as Carlyle/PMI & Vectura enter the fray.

Private equity observations

Unsurprisingly, the pandemic has heightened private equity interest in healthcare, a trend likely to persist for the next few years. Valuations and multiples are at all-time highs. We have seen high levels of deal activity since the middle of 2020 and there is continued interest in pharma services (CDMOs, gene/cell therapy) and healthcare (high acuity services).

We expect to see more activity in healthcare IT and telehealth, although there are few companies of any scale. The pandemic has positively skewed earnings for certain CROs and therefore valuations are more uncertain. CDMOs and CROs will need to demonstrate significantly differentiating value propositions, for example cell and gene therapy ‘know how’, and they will need to have reputations for high-quality service delivery to justify valuations. We have seen some companies explain in detail how their strategic investments in manufacturing capacity will position them well to capture significant growth beyond COVID-19.

While a global perspective is important, deep local relationships are critical to gaining proprietary access to companies. Private equity funds looking at prospective deals have struggled to get access to the right external advisors who tend to be focused on immediate transactions versus scoping out longer-term deal trends. Some funds are merging deal professionals with industry experts, demonstrating a move away from ‘the deal’ and towards securing the long-term health of portfolio companies.

Differentiation between private equity funds and justification of prices to investment committees require a more sophisticated understanding of people, their capabilities, potential and organisational culture. More than ever, private equity teams must know about sectors, companies and people dynamics.

There was a general consensus among VC and PE investors that there is “much more capital available than talent” and a number of management teams expressed their appreciation of the support they get from private equity investors, not only when it comes to M&A and corporate development, but also in operational issues.


The private biotech market has massively outperformed last year with significant IPOs and follow-on offerings, leaving companies well-funded. FDA approvals continue at pace, although the broader biopharma market is facing headwinds over US drug pricing. The top 12 biopharma companies have over $170 billion in cash and debt capacity to fund M&A. However, with biotech stock valuations falling the landscape looks ripe for acquisitions. In all these scenarios, investment decisions will rest on a thorough understanding of the motivations, behaviours, capabilities and track records of boards and management teams.