Biotech and Pharma M&A Activity Expected to Rise Later in 2024

With biotech and pharmaceutical companies facing looming revenue gaps later in the decade, mergers and acquisitions (M&A) are anticipated to pick up. However, experts at the BIO CEO & Investor Conference in New York City on Tuesday suggested that regulatory uncertainty is currently slowing down dealmaking.

M&A Trends and Expectations

According to Evan Matlin, a partner at MTS Health Partners, M&A activity has been slow in early 2024 due to market and regulatory uncertainties under the new U.S. administration. However, he expects deal activity to increase later this year as companies seek strategic acquisitions.

Regulatory hurdles have also played a significant role in slowing down transactions. The Federal Trade Commission (FTC) has been strict in reviewing deals, but Arda Ural, Americas life sciences leader at EY-Parthenon, believes that with Andrew Ferguson now as FTC chairman, approvals should become more favorable, potentially leading to a surge in M&A by summer 2024.

Key Areas of Interest for Acquirers

Companies are actively looking for new chemical entities with large addressable markets and high unmet medical needs, said Andrew Lam, managing director and head of biotech private equity at Ally Bridge Group.

Notable areas of interest include:

• Obesity treatments
• Antibody-drug conjugates (ADCs)

Lam also pointed out that many firms are focused on large-scale transactions, with most deals requiring a minimum valuation of $1 billion, and some companies only pursuing deals exceeding $2 billion.

Biotech IPO Struggles in 2024

The biotech IPO market has faced challenges in 2024. Lam noted that out of 17 biotech IPOs this year, 15 are currently trading below their initial offering price, despite 16 of these companies having clinical-stage assets. This suggests investor caution and market volatility in the sector.

Major Players in the Biotech and Pharma Industry

Some of the leading biotech and pharmaceutical companies expected to play key roles in M&A activity include:

Top Biotech Companies:

• Regeneron Pharmaceuticals (NASDAQ: REGN)
• Gilead Sciences (NASDAQ: GILD)
• Amgen (NASDAQ: AMGN)

Top Pharmaceutical Companies:

• Pfizer (NYSE: PFE)
• Bristol Myers Squibb (NYSE: BMY)
• Eli Lilly (NYSE: LLY)
• Merck (NYSE: MRK)
• Novo Nordisk (NYSE: NVO)

While M&A activity in biotech and pharma has been slow due to regulatory and market uncertainties, experts predict a strong rebound in dealmaking later in 2024. Companies are particularly interested in high-growth therapeutic areas such as obesity drugs and antibody-drug conjugates, signaling potential multi-billion-dollar transactions in the near future.