Oncolytics Biotech Inc T.ONC

RE:RE:Big pharma is set to keep signing bigger deals in 2024

[Noteable]

February 2024 2024 – PharmaExec.com – Coming out of the JP Morgan conference, S&P Global Rating Managing Director- Healthcare, Arthur Wong stated that Big Pharma companies  “are back again and getting an early jump in 2024 on the M&A side. Again, broadly for healthcare, but it’s led by big pharma and biotech companies again. Neither the high interest/elevated interest rate environment, the FTC scrutiny have thrown enough cold water on M&A and this underscores that a lot of these companies are still very high investment grades, so they can take the higher interest rate environment”

https://www.pharmexec.com/view/arthur-wong-arthur-managing-director-healthcare-s-p-global-ratings

In April 17, 2024 reports have suggested that – “There’s plenty of capital sitting on the sidelines—and investors can only wait so long to deploy it. Venture firms typically have to write checks within a certain period of time or return the money to their own investors.”

Perceptive Advisors, a life sciences portfolio holding company, has until May 2026 to spend a $515 million fund it closed in 2021. Several other venture capital firms are approaching similar cliffs: Many closed their last funds in 2020and 2021, when the COVID-19 pandemic sparked new interest in biotechnology investment.

The same time pressure applies for pharmaceutical companies looking to acquire smaller firms or license their assets. Arda Ural, EY’s Americas industry markets leader for health sciences and wellness, says Big Pharma has about $1.2 trillion in capital available for mergers and acquisitions, down just slightly from the $1.37 trillion the sector had in December. 

https://www.ey.com/en_gl/insights/life-sciences/mergers-acquisitions-firepower-report

Ural explained that it’s not the deal volume that has risen ... it’s the average biopharma acquisition size, which has increased by 77% as the life sciences sector’s biggest players – the Big Pharma multinationals – have begun to dominate industry dealmaking once again.

The huge growth potential of the oncology market is reflected in companies’ M&A spending over the past five years, which has heavily prioritized oncology. The changing regulatory landscape is also focusing attention on rare diseases; with legislation such as the IRA unlikely to affect their price-point orphan drugs have become one of the biggest M&A targets. [increasingly due to the passing of the US Inflation Reduction Act in January 2022]

Meanwhile, the expiration of several major patents means some pharmaceutical companies are staring down billions of dollars in revenue loss over the next several years, Ural says. That could eventually outweigh the macroeconomic factors that create risk, including geopolitical tensions, high interest rates, and inflation.

“This cannot sustain in the long term,” Ural says. “Something’s got to give.”