'More in the hopper': European Big Pharmas hint M&A could ramp up

Big Pharma dealmaking may have remained relatively tepid in the first quarter, but some of the bigger European players used their earnings calls last week to suggest they may be turning on the spending taps later in the year.

Novartis CEO Vas Narasimhan, M.D., admitted that the Swiss drugmaker had been “relatively quiet over the past year.” He attributed this M&A and licensing lull to the company’s “ongoing major transformative program”—which has seen a refocus on the U.S. and five core therapeutic areas—as well as “accelerating our internal assets that’s borne fruit with the positive readouts of Pluvicto [and] Kisqali.”

“But we are very actively looking across a range of both partnering, licensing and, of course, bolt-on M&A,” the CEO said on an earnings call with analysts April 25. “So we hope to execute some additional deals in our core therapeutic areas over the coming year.”

Those deals would likely “focus primarily in the sub-$5 billion range,” said Narasimhan, a position the CEO has repeated on similar calls in past quarters.

“We, of course, look at all deals and deal sizes, given the strength of our balance sheet,” he added. “But we want to stay extremely financially disciplined.”

Fellow Swiss Big Pharma Roche has its sights set firmly on early-stage biotechs as potential targets, judging by CEO Thomas Schinecker’s, Ph.D., comments.

“We are always open to M&A, and we always check all the opportunities that are on the market,” Schinecker said on an earnings call April 26. When it comes to companies in early-stage development, “there may be more opportunities now, simply because of the funding issues in the biotech sector.”

“I think in the late-stage opportunities, there are not that many and it's much more competitive,” he continued. “So I would say, we don't see the same kind of dynamic as we see in early-stage phases.”

It was GSK CEO Emma Walmsley who perhaps came closest to hinting at further deals already in development. “The shorter answer to your question is, yes, there is more in the hopper,” Walmsley said in response to a query about upcoming acquisitions. “But obviously we can't share details on that.”

The British Big Pharma hasn’t been afraid to splash the cash in recent months, paying $2 billion to buy Bellus Health and its chronic cough drug in April as well as $90 million to acquire an FDA-approved antifungal from Scynexis.

GSK is “absolutely delighted with the two deals,” said Walmsley, adding that the company intends “to do more.”

“Our No. 1 priority is to develop the pipeline,” the CEO explained on a call with journalists April 26. “And part of that has consistently been to do that through partnerships, [business development], M&A, licensing. It's one of the reasons we went through the biggest restructuring we've had for 20 years last year to create this additional capacity, which we're deploying very deliberately and strategically.”

If Big Pharmas live up to their dealmaking potential this year, it would mark a return to form after a number of lackluster quarters in terms of acquisitions. Drug developers spent a “mere” $8.8 billion on buyouts in the first three months of 2023, according to an Evaluate report published April 27.

“The volume of dealmaking remains in line with activity levels seen last year but, aside from Pfizer’s pledge to spend $45 billion on Seagen, deals are small with a huge valuation gap between that transaction and all others,” the report's authors noted.

“Valuations are depressed and the sector appears reluctant to spend,” they concluded.