Oncolytics Biotech Inc T.ONC

RE:Conditions are right for biopharma M&A to break out

[Noteable]

Repost: May 09, 2023 - "In biopharma, there are many reasons to believe that M&A is ready to surge. EY global deals leader Subin Baral said in an interview with Fierce Pharma that drugmakers are set to “pull the trigger.” 

Meanwhile, West Monroe analyst Jennifer O’Brien says there are a confluence of factors at play in the industry that will convince companies to dive into the market.

“It’s an interesting time, right on this perfect storm for biotechs and where big pharmas are in terms of building out their core specialty areas and having capital to deploy,” O’Brien said. “I think it’s a great space.” 

The incentive to seek out deals is high for big drugmakers because of looming patent cliffs and the need to secure replacement products. Another factor favoring M&A is the industry trend of companies selling off business units to focus on their more profitable pharma offerings.

Perhaps the biggest reason to expect more deals is the firepower on hand for many big pharma companies—$1.5 trillion, Baral says. 

The desire of multiple firms to make high-money deals has been apparent in the industry’s most recent transactions. Before Seagen sold off to Pfizer, three other companies were involved in talks with the biotech, according to SEC filings. And before Amgen closed last year’s biggest biopharma acquisition, paying $28 billion for Horizon, Johnson & Johnson and Sanofi were in the hunt. 

The firepower for Pfizer comes in part thanks to $57 billion in sales last year of its COVID products—the Comirnaty vaccine and the Paxlovid oral antiviral. In addition to the Seagen buy, the company had two of the top three deals in the industry last year, paying $11.6 billion for Biohaven and $5.4 billion for Global Blood Therapeutics. 

If a splurge of deals is imminent, Pfizer was just ahead of the trend, shaking off the unfavorable microeconomic conditions—inflation, high interest rates, overall economic uncertainty—to make deals influenced by compelling industry factors.

https://www.fiercepharma.com/pharma/lets-make-deal-conditions-are-right-biopharma-ma-break-out-analysts