PwC said many large pharmaceutical companies are facing an upcoming patent cliff that will impact sales of key drugs, which may prompt them to make more mergers and acquisitions with small and medium-sized biotech companies to offset revenue losses.
PwC said many large pharmaceutical companies are facing an upcoming patent cliff that will impact sales of key drugs, which may prompt them to make more mergers and acquisitions with small and medium-sized biotech companies to offset revenue losses.
In a recent article, PwC said that as a way to fill the pipeline gap from 2025-2030, these small and medium-sized biotech companies "will receive great attention in 2024." PwC said, "Competition for truly innovative assets is still fierce. At the same time, companies are continuously reviewing their investment portfolios to seek divestitures that could unlock value and provide funding for new M&A."
Speaking of the growth of GLP-1 class weight loss drugs such as Wegovy (semagludide) under Novo-Nordisk (NVO.US) and Zepbound (tizepatide) under Eli Lilly and Co (LLY.US), Christian Moldt, Global Health Industry Trading Director at PwC Germany, said, "Biotechnology companies that can innovate in this field, particularly those focused on providing oral administration methods, will be highly sought after."
It is reported that both Novo-Nordisk and Eli Lilly are developing oral weight loss drugs. Meanwhile, Viking Therapeutics (VKTX.US) has been the subject of market speculation for acquisition since the release of phase 2 data for GLP-1/GIP agonist VK2735 at the end of February and phase 1 data for oral VK2735 in March.
In addition, Christian Moldt added that he does not expect any large pharmaceutical company mergers this year. He also said that large pharmaceutical companies have an incentive to divest non-core or low-growth assets "to generate cash and drive new investments more closely related to core competitiveness."
However, biotechnology is not the only healthcare industry that may see increased M&A activity. Christian Moldt stated that due to population aging and income growth, demand for health products among consumers is increasing. He said, "By 2024, companies focusing on consumer health may still be attractive M&A targets, as recently divested pure over-the-counter drugs and consumer health businesses are expected to use M&A to accelerate their own growth and transformation plans." He added that this means companies like Kenvue and Haleon may be looking for potential acquisition targets.