RE:RE:Conditions are right for biopharma M&A to break outMay 26, 2023 - Experts at PWC, Goldman Sachs, and Morgan Stanley agree that pharma-related M&A is expected to pick up in 2023.
PWC predicts deal volumes to resemble prior years with the effect of the US Inflation Reduction Act on pricing better understood and less uncertainty surrounding business conditions, according to an article entitled Pharmaceutical & Life Sciences: US Deals 2023 Outlook published on the company’s website.
Similarly, Tom Miles and Brian Healy, Co-Heads of Americas M&A at Morgan Stanley, wrote that “looking further ahead to the second half of 2023 and beyond, deal-making is likely to accelerate,” in an article called 2023 M&A Outlook: 4 Trends as Deals Pick Up (published 10 February 2023) on the Morgan Stanley website.
In a Deloitte article entitled 2023 Global Life Sciences Outlook (published 19 April 2023), Vicky Levy, Global Life Sciences sector leader, Deloitte Consulting stated that “pressure on margins and sales, declining access to capital for biotechnology companies, the Inflation Reduction Act, and continued focus on health equity could help drive behaviour during the rest of 2023 and beyond. In response, I expect we will see increased attention on M&A”.
https://www.pharmaceutical-technology.com/comment/pharma-ma-resurge-late-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.