RE:RE:Big pharma is set to keep signing bigger deals in 2024How much of that $1.37 trillion can those top 25 biopharmas be expected to spend in 2024? “[Buyers] were sitting on the sidelines because of lot of uncertainties around macroeconomics and regulatory issues, but also geopolitical situations. But what we have said in our Firepower report is, they cannot sit on the sideline too long, because the patent cliff isn’t waiting for anybody,” EY's Subin Baral said.
“Just a matter of time”
“I think it was just a matter of time this was going to happen, and it is just happening now, as the LoE [loss of exclusivity] pressures are more imminent for a lot of these biopharma companies, and them having to go access this external innovation to fill the gap,” Baral added.
March 12, 2024 - In its Industry Credit Outlook 2024 report, released in January, S&P Global Ratings also sees the M&A wave sustaining power in the near term, pointing to the strategic need for companies to accumulate economies of scale, and secure higher reimbursement rates from payers, despite the elevated interest rate environment. CLOSING THE GAP(s)
Despite healthy footing in the immediate future—for example, Baral points out that the industry, according to EY reporting, has $1.37 trillion in capital available for dealmaking—the looming patent cliff is poised to widen biopharma’s “growth gap” considerably. The growth gap is defined as the difference between forecasted company revenue streams, along with projected sales from internal therapeutic candidates currently in clinical trials, and the revenue at risk from patent losses to top-selling, established brands and subsequent competition from generics and biosimilars. EY’s Firepower report projects that Big Pharma will be faced with a growth gap of more than $120 billion by 2028, doubling from the $60 billion estimated by 2026.
“What that means is there’s not enough [quality] pipeline in the R&D system to be able to bridge the gap that we expect the industry will have. That is a prime trigger for access to external innovation, M&A, partnership, etc.” Baral tells Pharm Exec.
https://www.pharmexec.com/view/twists-turns-biopharma-dealmaking-2024-trends