Biopharma M&A Market Update and 2024 Outlook

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: