M&A activity is picking up among pharmaceutical firms with large cash balances. Pfizer and Amgen have each closed a multi-billion dollar deal in the last week and Merck may be on the verge of announcing a rumored acquisition worth $40 billion.
Big pharma appears to be bolstering their drug pipelines while valuations are low, and as a way to get ahead significant patent cliffs hanging over the industry throughout the next six years. There is some increasing concern regarding how regulators will approach a wave of consolidation, but experts claim there is not much evidence linking company size and drug pricing.
Related ETF & Stocks: VanEck Pharmaceutical ETF (PPH), Pfizer Inc. (PFE), Amgen Inc. (AMGN), Merck & Co., Inc. (MRK)
Pharmaceutical firms are stepping up their mergers and acquisition (M&A) strategies. Per European Pharmaceutical Review and Ernst & Young LLP, big pharma firms accounted for about 77% of M&A spending in the biopharma sector’s second quarter. In the first quarter, the equivalent figure was just 10%.
Pfizer is leading the pack in dealmaking recently, campaigning to bolster the company’s drug pipeline by acquiring migraine specialist Biohaven Pharmaceutical for a $11.6 billion deal in May – the largest such acquisition this year. Pfizer also announced last December it would be acquiring Arena Pharmaceuticals for $6.7 billion.
Just yesterday, Pfizer disclosed the latest purchase of its buying spree, expending another $5.4 billion in cash for sickle cell disease drugmaker Global Blood Therapeutics (GBT). Per Reuters, Pfizer will add sickle cell disease treatment Oxbryta, which was approved in 2019 and is expected to top $260 million in sales this year, to its portfolio. It will also pick up two pipeline assets – GBT601 and inclacumab – targeting the same disease. If all of those products are approved, Pfizer believes GBT’s drugs could eventually generate more than $3 billion in sales annually.
Last week, MRP highlighted significant cash balances flowing to COVID-19 vaccine manufacturers like Pfizer and Moderna. We noted that capital could be used to strengthen other segments of their business.
Amgen last Thursday announced plans to acquire ChemoCentryx for $3.7 billion in a deal meant to deepen its pool of medicines targeting inflammation and the kidneys. BiopharmaDive notes that this deal will hand Amgen a few experimental medicines in the early stages of human testing, plus a….
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