Dive Brief:
- Global pharma, medical and biotech M&A fell nearly 10% by value through the first three quarters of this year versus the same period in 2016, according to a trend report from Mergermarket.
- So far in 2017, 1,040 deals have been struck in the three industries, collectively worth approximately $201 billion. Deal count was also down, with 106 fewer deals than by this time last year.
- Sector declines were more notable in the U.S., with only 625 deals worth a total of $97 billion conducted across all three sectors to date — a 23% drop in value year over year.
Dive Insight:
It wouldn’t take a report to see that M&A activity has ticked down after the boom years of 2014 and 2015, continuing last year's deceleration. But the analysis from Mergermarket, an M&A analysis firm, puts some hard numbers on that trend.
In biotech and pharma, the two largest deals so far this year were the near $30 billion acquisition of European biotech Actelion Pharmaceuticals by Johnson & Johnson, and the $10.2 billion pick-up of CAR-T biotech Kite Pharma Inc by Gilead Sciences Inc. Both acquisitions were driven by strong need from the bidders and the very clear fit those targets filled. Neither were deals driven by cost synergies or major operational overlaps.
Overall sector uncertainty in the U.S. has been a driving factor behind a less aggressive M&A market — from a lack of clarity on how tax reform will shake out to how the Trump administration will handle drug pricing and the Affordable Care Act after the defeat of repeal and replace.
But Mergermarket analysts believe M&A is going to reach back towards those higher levels seen in 2014 and 2015, rather than drop off further. "Global pharma, medical and biotechnology M&A activity is expected to continue growing as the industry goes through substantial transformations in the following years," said the report.
Outside of product buys, expect technologies such as AI that provide acquirers with better information or can speed discovery to make a major impact on dealmaking in coming years.