After a slow period during and after the acute COVID-19 crisis, the pace of mergers and acquisitions in the pharmaceutical and biotech sectors has accelerated. 2023 went out with a bang as biopharma firms struck a flurry of larger deals at the year’s end. That excitement carried into 2024 as several more companies announced major M&As during JP Morgan week. Indeed, Q1 2024 saw M&A activity increase by more than 100% compared with Q1 2023, according to a recent report from Leerink Partners, which forecast “biopharma M&A activity to remain elevated through the remainder of 2024.”
Cancer in Focus
So far this year, oncology has been one of the most active therapeutic areas for M&A deals. In Q1 alone, several deals of more than $1 billion were either closed or announced, including the February completion of AbbVie’s purchase of ADC developer ImmunoGen for more than $10 billion. In addition to ADCs, radiopharmaceuticals have attracted interest, as highlighted by AstraZeneca’s potentially $2.4 billion purchase of Fusion Pharmaceuticals in March and Novartis’ announcement last month that it plans to buy Mariana Oncology for $1 billion upfront, with another $750 million in milestones.
According to the Leerink report, inflammation & immunology was the second most active therapeutic area, though obesity and neurology are also hot areas at the moment.
M&A Strategies
While M&A activity is on an upswing, there is a conspicuous absence of deals worth more than $5 billion. Novartis CEO Vasant Narasimhan has said that the company’s overall M&A strategy is “to focus on sub-$5 billion assets.” Similarly, Merck CEO Rob Davis told analysts that the company is “continuing to do smaller deals,” with a focus on acquisitions in the $1 billion to $15 billion range.
This trend away from mega deals may be in part due to the increasing number of FTC challenges to M&As. Other factors influencing biopharma M&A strategies include impending patent expirations. Merck’s cancer blockbuster drug Keytruda, for example, will in 2028 lose patent protection, also known as loss of exclusivity (LOE). “We have a lot of pressure from LOE, which essentially kind of forces us to go out and buy new assets,” Christiana Bardon, co-managing partner at MPM BioImpact, told BioSpace.
