Insights into Healthcare M&A: Q2 2024 Trends
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July 2024
Biopharma M&A Market Update and 2024 Outlook
Healthcare M&A activity declined in 2023 due, in part, to rising interest rates and persistent economic uncertainty. Biopharma was the most active healthcare subsector for M&A, while Services experienced the largest year-over-year decline due largely to a drop in financial sponsor activity. Looking forward to 2024, we expect Biopharma M&A activity to remain resilient as large pharmaceutical companies attempt to fill revenue and pipeline gaps via acquisitions of late- or commercial-stage companies. Furthermore, we expect to see more pre-commercial biopharma companies pursue strategic alternatives, including mergers, reverse mergers and cash-out transactions as a result of the challenging capital markets environment.
Healthcare | M&A Themes
- Healthcare M&A deal value was $181B YTD 2023, down 10% on an annualized basis, from $235B in 2022, while deal volume was 94 transactions YTD 2023, down 34% on an annualized basis, from 166 transactions in 2022
- Biopharmaceuticals remained the most active sub-sector of Healthcare and represented 58% of deal value and 33% of the number of Healthcare transactions in 2023 (vs. 36% of deal value and 27% of the number of Healthcare transactions in 2022)
- Oncology was the most active therapeutic area for M&A, with 11 deals totaling $49B in deal value (~$6B excluding Pfizer’s ~$43B announced acquisition of Seagen)
- Rare Disease was the second most active therapeutic area for M&A, with 9 deals totaling $13B in total deal value (~$6B excluding Biogen’s ~$7B acquisition of Reata)
- Immunology was the third most active therapeutic area for M&A, with 7 deals totaling $25B in total deal value (~$15B excluding Merck’s ~$10B acquisition of Prometheus)
- Healthcare services transaction activity is down significantly from 2022, with 27 deals totaling $44B in deal value vs. 71 deals totaling $89B in 2022
- HCIT activity is also depressed from 2022, with 6 deals totaling $5B in deal value vs. 21 deals totaling $25B in deal value in 2022
Healthcare | M&A Activity
$ in billions
4Q 2023 Healthcare | M&A Activity
$ in millions
Biopharma | M&A Themes
Biopharma M&A deal activity declined modestly in 2023 with the announcement of 44 deals YTD, down 11% on an annualized basis from 58 in 2022
- Both large cap and mid-cap biopharmas have taken advantage of the challenging capital markets environment to acquire commercial or late-stage assets to fill revenue gaps
- Pfizer – Seagen (~$44B transaction value at 45% unaffected premium)
- Biogen – Reata (~$7.1B transaction value at 59% unaffected premium)
- Astellas – Iveric (~$5.1B transaction value at 64% unaffected premium)
- Acquirers have moved early to protect / expand key franchises
- Novo Nordisk – Inversago (Metabolic – ~$1B transaction value for private target)
- Eli Lilly – Versanis (Obesity – Up to ~$1.95B transaction value for private target)
- Eli Lilly – DICE (Immunology – ~$2.4B transaction value at 42% unaffected premium)
- Acquirers seeking to establish new growth pillars have acted boldly or bid aggressively for targets
- Merck – Prometheus (Immunology – ~$10B transaction value at 75% unaffected premium)
- Sanofi – Provention (Immunology – ~$2.5B transaction value at 273% unaffected premium)
- GSK – Bellus Health (Respiratory – ~$1.6B transaction value at 103% unaffected premium)
- New equity issuance in biopharma has seen a slight uptick from 2022 in terms of pace, however remains down from elevated pandemic levels
- 135 IPOs and FOs priced through November 10, 2023, raising ~$22.8B in total issuance (compared to 118 through November 10, 2022, raising ~$18.4B in total issuance)
- Of the IPOs priced in 2023, 8% priced below the launch range and 83% are trading below issue
We expect biopharma M&A activity to remain elevated in 2024. On the supply side, given challenging capital markets environment, we anticipate more biopharma companies to consider strategic transactions as a means to continue developing their assets and technologies. We also expect distressed publicly traded companies will continue to pursue reverse mergers or mergers of equals transactions. In addition, financial buyers will continue to step into provide cash-out transactions for companies trading significantly below cash. On the demand side, large biopharma continues to face impending revenue gaps due to anticipated patent expiries and will continue to acquire commercial stage of clinically de-risked companies in billion-dollar-plus deals. Larger transactions are possible, but we believe they are less likely considering recent FTC challenges to Horizon/Amgen and Seagen/Pfizer. We expect to see significant activity away from the mega deals.
4Q 2023 Biopharma | M&A Activity
$ in millions
Biopharma | Q4 Selected Key Upcoming Events
Written By:
Dan Lepanto
Senior Managing Director, Healthcare Mergers & Acquisitions
Dan Berenson
Director, Biopharma Mergers & Acquisitions
Aniket Kaloti
Director, Biopharma Mergers & Acquisitions
Disclosures
This information (including, but not limited to, prices, quotes, and statistics) has been obtained from sources that we believe reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. All information is subject to change without notice, and the information and any opinions contained herein are as of the date of this material and the Firm does not undertake any obligation to update them. The information is not an offer to sell or a solicitation to buy any product to which this information relates. Leerink Partners LLC (“Firm”), its officers, directors, employees, proprietary accounts, and affiliates may have a position, long or short, in the securities referred to in this report, and/or other related securities, and from time to time may increase or decrease the position or express a view that is contrary to that contained in this piece. The Firm’s research analysts, bankers, salespeople, and traders may provide oral or written market commentary or trading strategies that are contrary to opinions expressed, and the Firm’s market making desk may make investment decisions that are inconsistent with the opinions expressed in this document. The past performance of securities does not guarantee or predict future performance. This material does not take into account individual circumstances, objectives, or needs and is not intended as a recommendation to any particular person(s). As such, the financial instruments discussed herein may not be suitable for all investors, and investors must make their own investment decisions based upon their specific investment objectives and financial situation. This material is a marketing communication and is not and should not be construed as investment research or a research report prepared by a research analyst. Any views portrayed in this material may differ from those of the research department of Leerink Partners LLC. All information contained herein is intended solely for your own personal, informational use, and you are not permitted to reproduce, retransmit, disseminate, sell, license, distribute, republish, broadcast, post, circulate or commercially exploit the information in any manner or media without the express written consent of Leerink Partners LLC, or to use the information for any unlawful purpose. Additional information is available upon request by contacting the Editorial Department, Leerink Partners LLC, 53 State Street, 40th Floor, Boston, MA 02109. MEDACorp LLC (MEDACorp), an affiliate of Leerink Partners LLC, is a global network of independent healthcare professionals (Key Opinion Leaders and consultants) providing industry and market insights to Leerink Partners and its clients. © 2024 Leerink Partners LLC. All Rights Reserved. Member FINRA/SIPC.
Disclosures
This information (including, but not limited to, prices, quotes, and statistics) has been obtained from sources that we believe reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. All information is subject to change without notice, and the information and any opinions contained herein are as of the date of this material and the Firm does not undertake any obligation to update them. The information is not an offer to sell or a solicitation to buy any product to which this information relates. Leerink Partners LLC (“Firm”), its officers, directors, employees, proprietary accounts, and affiliates may have a position, long or short, in the securities referred to in this report, and/or other related securities, and from time to time may increase or decrease the position or express a view that is contrary to that contained in this piece. The Firm’s research analysts, bankers, salespeople, and traders may provide oral or written market commentary or trading strategies that are contrary to opinions expressed, and the Firm’s market making desk may make investment decisions that are inconsistent with the opinions expressed in this document. The past performance of securities does not guarantee or predict future performance. This material does not take into account individual circumstances, objectives, or needs and is not intended as a recommendation to any particular person(s). As such, the financial instruments discussed herein may not be suitable for all investors, and investors must make their own investment decisions based upon their specific investment objectives and financial situation. This material is a marketing communication and is not and should not be construed as investment research or a research report prepared by a research analyst. Any views portrayed in this material may differ from those of the research department of Leerink Partners LLC. All information contained herein is intended solely for your own personal, informational use, and you are not permitted to reproduce, retransmit, disseminate, sell, license, distribute, republish, broadcast, post, circulate or commercially exploit the information in any manner or media without the express written consent of Leerink Partners LLC, or to use the information for any unlawful purpose. Additional information is available upon request by contacting the Editorial Department, Leerink Partners LLC, 53 State Street, 40th Floor, Boston, MA 02109. MEDACorp LLC (MEDACorp), an affiliate of Leerink Partners LLC, is a global network of independent healthcare professionals (Key Opinion Leaders and consultants) providing industry and market insights to Leerink Partners and its clients. © 2024 Leerink Partners LLC. All Rights Reserved. Member FINRA/SIPC.
Disclosures
This information (including, but not limited to, prices, quotes, and statistics) has been obtained from sources that we believe reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. All information is subject to change without notice, and the information and any opinions contained herein are as of the date of this material and the Firm does not undertake any obligation to update them. The information is not an offer to sell or a solicitation to buy any product to which this information relates. Leerink Partners LLC (“Firm”), its officers, directors, employees, proprietary accounts, and affiliates may have a position, long or short, in the securities referred to in this report, and/or other related securities, and from time to time may increase or decrease the position or express a view that is contrary to that contained in this piece. The Firm’s research analysts, bankers, salespeople, and traders may provide oral or written market commentary or trading strategies that are contrary to opinions expressed, and the Firm’s market making desk may make investment decisions that are inconsistent with the opinions expressed in this document. The past performance of securities does not guarantee or predict future performance. This material does not take into account individual circumstances, objectives, or needs and is not intended as a recommendation to any particular person(s). As such, the financial instruments discussed herein may not be suitable for all investors, and investors must make their own investment decisions based upon their specific investment objectives and financial situation. This material is a marketing communication and is not and should not be construed as investment research or a research report prepared by a research analyst. Any views portrayed in this material may differ from those of the research department of Leerink Partners LLC. All information contained herein is intended solely for your own personal, informational use, and you are not permitted to reproduce, retransmit, disseminate, sell, license, distribute, republish, broadcast, post, circulate or commercially exploit the information in any manner or media without the express written consent of Leerink Partners LLC, or to use the information for any unlawful purpose. Additional information is available upon request by contacting the Editorial Department, Leerink Partners LLC, 53 State Street, 40th Floor, Boston, MA 02109. MEDACorp LLC (MEDACorp), an affiliate of Leerink Partners LLC, is a global network of independent healthcare professionals (Key Opinion Leaders and consultants) providing industry and market insights to Leerink Partners and its clients. © 2024 Leerink Partners LLC. All Rights Reserved. Member FINRA/SIPC.
