There were some tumultuous times for investors and dealmakers alike in 2016. There were some high moments, but also some lows, which isn’t necessarily uncommon in an election year. Post-election things are seemingly calming down a bit, but investors are still looking toward the future to determine the best moves to make in 2017.
While there isn’t a crystal ball that lets investors know exactly what to do to maximize the current political and economic environment, there are some factors that can be taken into consideration as you’re shaping your investment plans for the coming year.
According to Firmex in their quarterly Mid-Market M&A Report entitled “Dealmaking Opportunities in 2017,” 2016 was a relatively strong year for biotech, and with the incoming administration looking to potentially eliminate many of the regulations in the sector, it’s an important one to consider for investors.
Below are some of the specifics investors might want to think about as they look toward opportunities or potential pitfalls with biotech.
There’s a lot of money that’s been sitting on the sidelines, and some analysts believe 2017 may be the year that private funding gets put into biotech businesses. It could be that new, smaller startups are seeing an influx of funding in 2017, particularly as the dealmaking environment is increasingly competitive and investors are looking for smaller, less competitive opportunities.
It should be noted that 2016 wasn’t necessarily a bad year for biotech firms regarding fundraising, with estimates showing more than $7 billion in biotech venture funding, and there’s the potential for that number to go higher in 2017.
Importance of Immuno-Oncology
If investors are looking for a particular area within the larger biotech sector to invest, they might want to look at immune-oncology. This is an area of the biotech sector where a lot of money and attention are going.
Research is ramping up at a rapid pace because there have been some breakthroughs here, and there is the likely potential for more progress to be made in the near future.
Last year there was a huge amount of focus on the increasing legalization of marijuana in states around the country, but that’s become more questionable with the incoming administration.
Four U.S. states voted for the legalization of marijuana in 2016, and it was a promising consideration for biotech investors, but there is uncertainty with how marijuana and its legalization and research for medicinal purposes will fare under a Trump presidency, particularly with his conservative picks for top spots such as Attorney General.
As a final note for what’s likely to be relevant in the biotech sectors, acquisitions may play a key role. Acquisitions are always a pretty significant thing in biotech, and buyouts may be on the rise in 2017. The reason goes back to the fact that many companies have been sitting on huge cash reserves for several years, and they may be ready to spend in 2017.
Investors might expect bigger companies to be looking at smaller market caps, and maybe larger companies buying several smaller companies throughout the year.
Of course, there’s no definitive answer as to the direction biotech will take in 2017 but the above are some relatively common predictions being seen in the sector.………….