Biopharma dealmaking continues to rise, but M&A values hold steady: PwC

Thanks to a flurry of dealmaking across the Christmas period and into the new year, it sure feels like both biotechs and Big Pharma have picked up the pace when it comes to hunting down fresh assets. After crunching the data, PwC has come to the same conclusion.

As of May 15, deal volume across the pharma and life sciences sector was up 20% over the previous-year period, according to a mid-year outlook on the U.S. deals scene from the accounting firm. PwC’s analysis is derived from data taken from S&P Capital Market IQ.

“The increase in combined deal volume observed in 2024 continues the robust performance seen in the previous year,” PwC explained to Fierce Biotech via email. “Specifically, there was a 4% uptick in deal volume in 2023 compared to 2022.”

Despite the jump in the number of deals being signed by mid-May to 257—a pattern that was reflected when the analysts dug into the individual figures for pharma, biotech, medtech and “other”—the combined value of these announcements topped out at $209 billion, a 2% dip compared to the previous 12-month period, the report’s authors pointed out.

Only pharma bucked this trend, seeing the overall value of its deals increase. Specifically, the value of pharma’s dealmaking in the year up to May 15 was $60 billion, doubling the $30.1 billion from the previous-year period, according to figures shared with Fierce. In contrast, the value of biotech deals dropped to $102.7 billion in 2024 from $125 billion for the same period in 2023.

So what’s driving interest from buyers? The report’s authors pointed to “strong numbers of novel therapeutic approvals, alongside major strides in innovation.”

They highlighted antibody-drug conjugates, metabolic dysfunction-associated steatohepatitis (MASH), radiopharmaceuticals and cell and gene therapies as key drivers of enthusiasm from acquirers. These “high innovation areas” have the “potential to fill looming loss of exclusivity gaps in the latter half of the decade,” the firm pointed out.

“As dealmakers become more comfortable with regulatory uncertainty, we’ve seen dealmakers increasingly focused on deals in the $5 billion to $15 billion range rather than in large-scale transformative M&A,” Roel Van den Akker, PwC’s Pharma and Life Sciences Deals Lead, said over email. “Significant progress in innovation continues and we expect to see continued robust deal activity in late 2024 and into 2025.”

An increase in the number of biotech IPOs so far this year is also a reflection of “investors' confidence in a more stable macroeconomic backdrop,” the report’s authors said.

Big Pharmas have been rushing to board the obesity bandwagon, and the authors added that the “impact of GLP1s continues to be felt across all categories.”

“Many in the sector continue to grapple with understanding the long-term effect these drugs could have on other therapeutic areas,” they added. “We expect dealmakers throughout the sector to actively monitor trends in demand for GLP1s as they assess deals in the second half of 2024 and well into the future.”

Topping the deals across the life sciences and pharma sector as of May 15 was the move by Novo Holdings, which operates under Novo Nordisk’s owner the Novo Nordisk Foundation, to snap up contract manufacturing giant Catalent for $16.5 billion.

Johnson & Johnson’s $13.9 billion acquisition of medical device maker Shockwave Medical came in at second, while biotech buyouts filled up the remainder of the top five courtesy of Vertex picking up Alpine Immune Sciences, Novartis buying MorphoSys and Gilead getting its hands on CymaBay Therapeutics.

“The first half of 2024 shows how the industry has learned to execute accretive deals in the face of persistent headwinds,” the report’s authors concluded. “There could be robust deal activity in late 2024 and into 2025, particularly if investors gain clarity on factors that have been a barrier to completing deals in recent years, including regulatory changes coming out of U.S. elections and interest-rate plans from the U.S. Federal Reserve.”