Pharmaceuticals, acquisitions at lowest level in 10 years
By the end of November, the segment had completed 558 deals worth a total of USD 67.2 billion, the lowest level since 2016
by Mo.D.
3' min read
3' min read
Merger and acquisition activity in the pharmaceutical industry dropped to its lowest level in the last decade this year. The industry's big players are turning to take over biotech companies with drugs still in the early stages of testing, as the premium to be paid is much lower than for companies with ready-to-market drugs.
By the end of November, the sector had completed 558 deals worth a total of $67.2 billion. The lowest level since 2016, according to data released by the London Stock Exchange. In this context, the biggest biotech deal of the year was Vertex's $4.9 billion acquisition of autoimmune disease biotech company Alpine Immune Sciences. A deal that has nothing to do with last year's biggest acquisition, namely Pfizer's $43 billion takeover of cancer drug developer Seagen. So much so that total deal value globally at the end of November was half that of last year, according to Lseg data.
The sector's difficulties do not incentivise consolidation
.The pharmaceutical industry is going through a phase of readjustment compared to the post-Covid period and is looking for new areas of resilience and revenue growth. Added to this is the flurry of patent expirations. Indeed, estimates indicate some$59 billion in lost sales for the major pharmaceutical groups due to the expiry of exclusivity on a basket of 190 drugs by the end of the decade, according to Kpmg.
The pharmaceutical groups have nevertheless continued scouting, but aiming at selected targets, and in any case at easily 'digestible' sizes, while at the same time taking advantage of the period to rationalise their divisions and dispose of non-core assets. On the one hand, therefore, there are operations such as that of Novo Nordisk, for example, which this year took over three production sites from Catalent for USD 11 billion; on the other hand, there are divestments such as that of Sanofi, which, on the other hand, was the protagonist of a major divestment, selling its consumer drugs division to the private equity group Clayton Dubilier & Rice in a EUR 16 billion deal.
The new Trump era
.In this 2024, the big pharmaceutical groups therefore preferred to focus on transactions below the EUR 5 billion threshold, preferring to take over private companies rather than listed companies.
