Big pharma re-engaged in M&A in 2023, driving life sciences spending to $191 billion, a 34% increase from 2022, according to the newly released annual EY M&A Firepower report.
Renewed interest from pharma multinationals can be linked to upcoming patent protection losses and a need for new areas of revenue growth and value, the report said, along with high levels of financial capacity. This biopharma dealmaking trend is expected to continue through 2024 as there is more than $1.37 trillion available in M&A capital, according to EY analysts.
The report offers context to insights from pharmaceutical executives who told attendees at the J.P. Morgan Healthcare Conference in San Francisco on Monday about what good dealmaking looks like in a competitive year with marketing and regulatory challenges.
Why data matters
Having high-quality data, transparency about what is achievable and what still needs to be solved, and being ready to move quickly and efficiently with a company that has a shared vision, are all factors in successful partnerships.
James Sabry, global head of Pharma Partnering at Roche, said to get medicines to market, it is important for drug developers to “really clearly articulate” to potential partners the attributes of their products, in detail and with good science. Early contact can mean there is less quality research data available.
Devang Bhuva, senior vice president of Corporate Development at Gilead Sciences Inc., said companies need to be transparent about where they are in the development process, identifying what issues are solved and what challenges remain.
The first contact must be made by someone who understands the science, rather than someone in finance, said Glenn Hunzinger, Pharmaceutical & Life Sciences Consulting Solutions leader at PwC US. “If you are grounded in the science…if that is the fondation…I think the chemistry is there,” he said.
Sabry added that boards and management teams should focus on whether a company will be the best partner for them going forward and have a shared vision, instead of just considering the finances of the deal.
It can take years to cultivate relationships and trust, and drug developers should understand the challenges facing the industry and be able to tell a partner how they can succeed together.
“Data trumps,” said Rachna Khosla, senior vice president and head of Business Development at Amgen, adding that a “data event,” when a company has quality data, often will trigger a M&A deal.
The M&A market is competitive because there are far fewer companies with drugs in later stages of development than there are companies with early stage products.
Sabry said you can count late-stage assets “on a couple of hands and feet,” so there is an opportunity to investigate the corporate structure and management teams of numerous candidates and be ready to move quickly when data become available.
The panel said AI will affect almost every aspect of pharmaceutical R&D and M&A, from clinical trial design and data submission to identifying innovation faster and having more information available quickly.
Hunzinger said industry expectations are that 65 new compounds will be approved in 2024 and 2023 ended with a flurry of activity in the fourth quarter. Bhuva said the additional capital will offer opportunities to find innovations and build pipelines.
If you liked this article, sign up for SmartBrief for Health Care Leaders. It’s among SmartBrief’s more than 250 industry-focused newsletters.