RE:RE:RE:RE:Biotech M&A is picking back up according to BiopharmaDiveSubin Baral, EY Global Life Sciences Deals Leader, recently discussed factors that help explain the budding comeback of biopharma M&A, and what the next few months may hold, with GEN Edge. Subin Baral: We have always said an M&A comeback was a matter of when and not if. The industry fundamentals have been pretty strong, and we have been a big advocate when the market was down from a macroeconomic perspective.
If you drill down, particularly in the biopharma space where we’re looking at record firepower, we’re looking at the patent cliff that is looming—the majority of the branded drugs coming off patent between now and 2030—and we’re also looking at the R&D deficit within the big biopharma companies. There is not enough in the pipeline to be able to replenish, or substitute for their revenue potentially lost through the patent cliff.
If you just focus on those three factors alone, there are enough drivers to continue the deal making when you think about it. We’re bullish.
Coupled with the fact that the valuations of the big biotech companies have actually stabilized, we are not really surprised by this comeback. We were just waiting for things to happen, and we even asked in our prior publication, how long can biopharma companies really wait on the sidelines, because the patent cliff is looming? We’re not overly surprised that the market has rebounded in in the way it has.
And if you have the right seller with the right data and science behind it, those deals are getting the valuations that are high and attractive.
A lot of the immunology and oncology deals that are happening, they’re all attracting those high valuations. That’s because the priority focus is the area. I hate to say it, but I don’t think anything has changed drastically in terms of what makes it an attractive asset.
Big biopharma is looking at companies that are Phase II and beyond.
GEN Edge: Speaking of larger companies, big pharmas have been buying a lot of smaller biotechs this year. Novartis has bought two companies, so too Eli Lilly. Gilead, Astellas, GSK, Merck, Pfizer, Sanofi, AstraZeneca, BioNTech and Moderna have each bought one biotech. Why have so many of the bigger companies been such active buyers?
Baral: I don’t think this is any different than what we have seen in the past, where biotech companies have continued to feed into the big biopharma companies. It’s even more so now because of the two factors that that I talked about before, the LoE pressures, and the lack of R&D pipeline within these biopharma companies. Those two factors are always an attractive measure as to why biotech companies have continuously been a good mechanism for the big biopharma companies to fill their pipelines.