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."
When discussing the growth of GLP-1 weight loss drugs such as Wegovy (semaglutide) under Novo Nordisk (NVO.US) and Zepbound (tizepatide) under Eli Lilly (LLY.US), PwC Germany's global healthcare industry transaction director, Christian Moldt, said, "Biotech companies that can innovate in this area, especially those that focus 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 speculated to be an acquisition target in the market after releasing Phase 2 data on GLP-1/GIP agonist VK2735 at the end of February and Phase 1 data on the oral version of VK2735 in March.
In addition, Christian Moldt added that he does not expect major mergers and acquisitions by large pharmaceutical companies this year. He also said that large pharmaceutical companies have the incentive to divest non-core or low-growth assets, "to help generate cash and drive new investments that are more closely related to core competencies."
However, biotech is not the only healthcare industry where M&A activity may increase. Christian Moldt said that with aging populations and increasing incomes, consumer demand for health products is on the rise. He said, "By 2024, companies focused on the consumer health space may still be attractive acquisition targets, as recently divested pure-play over-the-counter and consumer health businesses are expected to use deals to accelerate their growth and transformation plans." He added that this means companies like Kenvue and Haleon may look for potential acquisition targets.