Big pharma M&A activity in the new year is expected to expand, continuing a trend that gained steam throughout 2023. The value of biopharma deals doubled this year compared to 2022, boosted by Pfizer’s newly-sealed purchase of Seagen – the largest biopharma acquisition since 2019. The biotech sector remains in distress and in need of cash, but VC funding in the space has dried up compared to recent years.
New data shows that nearly half of biotechs are now relying on cash-rich big pharma firms for financing. These partnerships will bolster pharmaceutical industry’s access to equity, licensing, and other benefits derived from their ability to keep startups afloat in desperate times. Big pharma is continually bolstering their pipelines to sustain growth and avoid drop-offs in revenue from looming patent cliffs.
Related ETF: VanEck Pharmaceutical ETF (PPH)
Following a final nod of approval from the US Federal Trade Commission (FTC) last week, Pfizer has closed its massive $43 billion acquisition of Seagen – sealing the largest biopharma deal in almost four years’ time. Though there was some uncertainty regarding the FTC’s reaction to this deal, MRP noted in September that it was unlikely the commission would stand in Pfizer’s way, following the sudden settlement of a previously-filed suit targeting Amgen’s proposed $27.8 billion purchase of Horizon Therapeutics. That was the richest biopharma deal of 2022 and MRP posited that an ongoing wave of M&A activity among pharmaceutical and biotechnology firms would be bolstered by the conclusion of the FTC’s legal action.
The closure of these two monumental deals, as well as several other factors, may set the stage for an this trend to gain further steam in 2024. A new PwC report notes that 2023 has been “a reasonably strong year” for deal value and volume in the pharmaceutical and life sciences sector. Moreover, they suggest 2024 will yield similar M&A activity across the pharmaceutical and life sciences sector, with deals reaching a “healthy” range of $225 billion to $275 billion. We originally posited that M&A activity would pick up among big pharma buyers and increasingly distressed biotech startups way back in the summer of 2022. Not only have cash balances been strong across the pharmaceutical industry throughout the past couple of years, but…
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