Pressed by Wall Street, Pharma signals openness to M&AFebruary 07, 2022 - Biopharma Dive
[ Big Pharma ] executives have signaled openness to dealmaking in recent quarterly earnings conference calls. A few have even suggested they may be more active than before.
Expectations are again high that M&A activity will be strong in 2022. Notably, more than a dozen large pharmaceutical companies each will have at least $20 billion in cash available to them by the end of this year, according to analysts at SVB Leerink. Pfizer, in particular, is benefiting hugely from the tens of billions of dollars in revenue generated by its COVID-19 vaccine, while Novartis recently sold a stake in Roche for $21 billion.
A good number of those firms, including Merck, Bristol Myers Squibb, Amgen and AbbVie, face loss of patent exclusivity in the coming years for top-selling drugs like Keytruda, Opdivo, Enbrel and Humira, respectively.
Those factors together should motivate buying as executives hunt for ways to replace expected declines in revenue.
But they may not prompt large-scale takeovers like past deals for Shire, Celgene and Allergan. "We do not have plans to do larger M&A," said Novartis CEO Vas Narasimhan, adding that "it's harder to make the numbers work to create value for shareholders."
Instead, many CEOs have expressed greater interest in "bolt-on" deals that can be welded to existing strategies.
But even bolt-on deals can come with a big sticker price, depending on the size of the acquirer. Merck, which CEO Rob Davis has said will be "appropriately aggressive," bought Acceleron last year for $11.5 billion.