A record number of drugmakers declared bankruptcy in 2019, analysis shows

The number of drugmakers that filed for bankruptcy in 2019 was nearly three times more than the yearly average in the last decade, according to a BioPharma Dive review of data tracked by research firm BankruptcyData. 

In 2019, 11 drugmakers filed for bankruptcy. In the last decade, the yearly average was four.

Bankruptcy is rare in the pharmaceutical industry because drugmakers are strategically structured to avoid it, as they are pre-revenue companies that typically carry a light debt load and have little to restructure through bankruptcy. 

However, more companies are going public in greater numbers at larger valuations, which carries a higher risk, according to BioPharma Dive. Additionally, drug pricing is a key issue in the 2020 election, and proposals such as House Speaker Nancy Pelosi's drug pricing bill threaten drugmaker's stability.

Legal uncertainty, caused by thousands of lawsuits related to the opioid crisis, is also making companies "uninvestable," Ami Fadia, a SVB Leerink analyst, told BioPharma Dive. Purdue Pharma and Insys Therapeutics have already been forced to file for bankruptcy because of opioid litigation, and others such as Teva Pharmaceuticals, Mallinckrodt and Amneal are at risk of joining them. 

"When they stumble, the markets are more unforgiving than ever,"  Evercore analyst Josh Schimmer, MD, told BioPharma Dive. "They aren't given second chances the way they used to be given. That may be a factor that does lead to a higher rate of bankruptcies."

Industry experts told BioPharma Dive the number of drugmakers that filed for bankruptcy in 2019 could signal that more companies will join as legal and political threats to the industry mount. 

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