Biotech M&A to show less 'fire power' in 2024 due to low-valued deals
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BIOTECH M&A TO SHOW LESS 'FIRE POWER' IN 2024 DUE TO LOW-VALUED DEALS
Biotech sector deals have been on the rise since last year, yet most deals this year have grabbed a lower valuation, reflecting less "fire power" after the M&A frenzy of 2023, said brokerage Leerink Partners on Monday.
A Leerink analysis of M&A activity among large-cap biotechs showed that although the number of deals in the biopharma sector outpaced the historical mean of past 15 years, deal values in 2024 seem less robust than last year with no deals crossing the $5 billion mark.
About $30 billion in deal flows have been recorded for 2024 so far, less than one-third of the $110 billion flows recorded for the same period in 2023.
Some of the bigger deals this year include Vertex Pharma's VRTX.O $4.2 billion acquisition of Alpine Immune and Gilead's GILD.O $3.5 billion deal for Cymabay Therapeutics.
Leerink analysts believe that a majority of large-cap companies like Biogen BIIB.O, Astrazeneca AZN.L, GSK GSK.L, Eli Lilly LLY.N and Merck MRK.N are financially strong to engage in major M&A activity.
"We think Lilly will be an aggressive acquirer for many years to come, because it is likely to reinvest against outsized obesity-related profits," the analysts said.
But the likes of Amgen AMGN.O, Pfizer PFE.N and Bristol-Myers BMY.N have less capacity for greater than $10 billion deals in the near-term.
U.S. Federal Trade Commission's reiteration of continued scrutiny on biotech M&A has led to buyers exercising caution when pursuing larger deals.
But, in the event of change to a Republican administration, the FTC "could loosen up" and allow more deals to occur" and more robust M&A activity in the sector could occur, Leerink analysts said.
(Sruthi Narasimha Chari)
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