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As many large pharmaceutical companies continue to grapple with looming patent cliffs that will impact sales of key drugs, this could spur additional deals for small and mid-sized biotechs to make up for lost revenue.
These biotech companies will “receive” “will be the subject of significant attention in 2024” as a way to fill gaps in the second half of the decade, according to PwC.
“Competition for truly innovative assets remains intense,” according to a recent PwC article titled “Global M&A Trends in Healthcare Industries.” “At the same time, companies are continually reviewing their portfolios for divestiture candidates that can unlock value and provide capital to invest in new acquisitions.”
Citing the growth of GLP-1-based weight loss drugs such as Novo Nordisk's (NVO) Wegovy (semagludide) and (New York Stock Exchange:LLY) Zepbound (tirzepatide), PwC Germany's global healthcare industries deals leader Christian Moldt noted that “biotech companies that can innovate in this space, especially those focused on providing an oral delivery method, will be highly sought after.”
Both companies are developing oral weight-loss therapies. Lilly's, in Phase 3, is known as orforglipron. Novo published Phase 3 data on a 50 mg oral version of semaglutide in 2023 and Phase 1 data on amicretin, a GLP-1 and amylin co-agonist, in March of this year.
Viking Therapeutics (NASDAQ:VKTX) has been the subject of speculation about a possible acquisition following positive Phase 2 data for its oral GLP-1/GIP agonist VK2735, published in late February. It has the same mechanism of action as Zepbound.
Mold added that he does not expect to see any mega-deals combining large pharmaceutical companies this year.
He also said that big pharmaceutical companies are motivated to divest non-core or low-growth assets “to help generate cash to move forward on new investments that align more closely with their core competencies.”
However, biotechnology is not the only healthcare industry that could see an uptick in M&A activity. Moldt said demand for consumer health products is increasing due to an aging population and higher incomes.
“Companies specializing in consumer health areas will likely remain attractive acquisition targets in 2024 as recently spun-off consumer health and over-the-counter drug businesses are expected to use the transactions to accelerate their own growth and transformation plans,” he wrote.
That means companies like Kenvue (KVUE) and Haleon (HLN) could be looking for potential acquisitions.
