What You Should Know:
– The pharmaceutical and life sciences (PLS) sector is experiencing a resurgence in dealmaking activity, with a 20% increase in deal volume over the past year reported, according to PwC’s latest US Midyear Deals 2024 Outlook for Pharmaceutical and Life Sciences.
– M&A activity in the PLS sector is expected to remain strong throughout 2024 and potentially into 2025. Clarity on factors like US election outcomes and Federal Reserve interest rate decisions could further bolster investor confidence and fuel even more deals.
Key Drivers of Increased M&A Activity:
- Innovation Focus: Companies are strategically acquiring assets in high-innovation areas like gene therapy and novel drug treatments to address patent expirations later this decade.
- Strong IPO Market: The reopening of the IPO market indicates renewed investor confidence, potentially fueling further M&A activity.
- Portfolio Restructuring: Companies are divesting non-core assets and reorienting their focus areas to maximize growth, especially with rising financing costs.
- Strong Product Pipelines: A surge in successful drug approvals and advancements in therapeutic areas like NASH treatments are attracting acquirers.
Challenges and Considerations for PLS M&A:
- Regulatory Scrutiny: Increased scrutiny from the Department of Justice and FTC may impact deal strategies due to concerns about competition and patient access to medication. Companies will need to ensure deals meet stricter standards regarding market share and potential monopolies.
- Planning for Uncertainty: Navigating a dynamic environment requires scenario planning and flexibility to maximize value creation in M&A pursuits.
- Talent Retention: Retaining key talent is crucial during extended deal periods to ensure successful integration and future growth.
The GLP-1 Effect:
The ongoing impact of glucagon-like peptide-1 (GLP-1) drugs across various therapeutic areas is being closely monitored by dealmakers. Understanding the long-term effects of these drugs will be essential for future deal assessments.