RE:Pharma faces looming patent cliff - seller's market in bioIn 2020 and 2021, biopharma companies had the luxury of employing a watchful, waiting approach. However, with pipeline replenishment diminishing beyond 2022 and the innovation deficit widening by 2025, companies need to increase their deal-making in the near-term to maintain and sustain long-term growth.
David Wainer of the Wall Street Journal (WSJ) recenty wrote that it's a "seller's market in biotech," thanks in part to the "diminishing list of desirable biotechs" and the fact that other pharma companies are in Pfizer's shoes: "About $200 billion in sales is going off patent this decade." In his view, it makes sense that Pfizer is emerging as "one of the most aggressive deal makers," citing those strong COVID earnings but also the patent cliff and waning COVID market.
As a result of the patent cliffs in 2023 and beyond, there will be an increasing pressure on large biopharma companies to replenish their pipelines, regardless of whether that comes from in-house R&D or new partnerships and acquisitions.
This year (2023), several top drugs are set to lose U.S. exclusivity as patents expire or settlements allow for generic entry and are seeking significnt acquistions to fill their product pipelines and are looking to early - late stage biotechnology companies that have de-risked their products.
This comes at a time when recently passed Inflation Reduction Act (IRA) provides drugmakers with biological products, such as ONCY’s pelareorep, with 13 years of market exclusivity per indication upon FDA approval of the product for each indication. Additionally the Federal Trade Commission (FTC) is acting to increasingly overturn large value mergers, such as Amgen's US$28 Billion acquisition of Horizon therapeutics or the recently announced intended merger of the PGA and LIV Golf, as examples. Foreign direct investment is on the FTC's radar.
To bridge this innovation gap, pharma CEOs will need to form stronger regional / global ecosystems that can foster innovation. These ecosystems will be driven by M&As as a pipeline development strategy. All these recently global developments are leading to a rapidly expanding sellers market in biotech. Consequently the acquisition (M&A) value for ONCY's de-risked immune molecule platform technology pelareorep is between US$10 Billion and US$15 Billion and is significantly higher than it was 5 years ago.