RE:RE:RE:PwC sees continuation of US$ 5 to 15 Billion Bio M&A Deals Big pharma deploy their firepower
The EY global research found that one of the fundamental reasons behind the 2023 rebound is the increased involvement in M&A from the life sciences sector’s biggest players – the pharma multinationals. These companies dominated industry dealmaking, with more than two-thirds (69%) of M&A investment coming from big pharma, compared with just 38% in 2022. Eleven large pharma companies all signed at least one deal of US$1b or more in value, Merck broke the US$10b barrier with its acquisition of immunology specialist Prometheus in April, while the largest deal by a significant margin was Pfizer’s acquisition of Seagen for US$43b in March.
These major investments meant that despite the dip in deal volume, the average biopharma acquisition size increased by 77% in 2023 (US$1.23b in 2022 vs US$2.18b to Dec 10, 2023). Big pharma is set to keep signing these bigger deals in 2024, signaling a major return to M&A.
M&A targets: oncology and rare diseases
The huge growth potential of the oncology market is reflected in companies’ M&A spending over the past five years, with oncology dominating industry acquisitions in both value and volume terms – in 2023, M&A investment in oncology assets reached US$65.2b. The intense competition for these assets has also resulted in companies paying higher multiples than for targets in other therapeutic areas. With multiples for oncology acquisitions over the past decade averaging 11.9 times total target company revenues, acquirers must work to ensure they extract value from their deals in this space.
As well as oncology, the changing regulatory landscape is leading to other assets becoming attractive acquisition targets. With legislation such as the IRA unlikely to affect the price point for orphan drugs, companies specialising in rare diseases have become significant M&A targets, commanding high multiples and driving some of the biggest deals of the past 12 months.
https://www.ey.com/en_ie/news/2024/01/surge-in-life-sciences-m-a-globally-fuelled-by-sectors-capital-reserves-and-quest-for-new-revenue-growth
https://finance.yahoo.com/video/big-pharma-king-hill-m-225153046.html