Up to December 1, 2020, mergers and acquisitions (M&A) deal value in the bio/pharma industry was down only 13 per cent compared with last year, with a total deal value of $228 billion compared with $262 billion in 2020, and almost twice the 2017 total deal value of $126 billion. This made 2020 the second-highest year for M&A deal value of the last five years, says GlobalData.
Madeleine Roche, Pharma Analyst at GlobalData, comments, “Bio/pharma companies continue to utilise M&A as a source of innovation and development, with large-cap bio/pharma in particular, preferring to acquire an innovative biotech rather than risk the staggering and ever-growing cost of internal R&D investment.”
AstraZeneca’s announcement that it will acquire rare disease company Alexion Pharma for $39 billion, with the deal expected to be completed in Q3 2021, suggests 2021 will be another year of high deal value despite the lower deal volume.
Roche continues, “It is likely that this trend of mega-deals will continue, as Big Pharma favours M&A over internal R&D as a means of innovation and portfolio diversification.”
M&A deals are a core driver of growth in the bio/pharma industry. COVID-19 has potentially boosted M&A activity as Big Pharma market caps has risen while R&D and sales activities are hindered.
Roche adds, “The trend of mega-deals between large corporations will continue in the next few years along with the trend of increased deal values and decreased deal volumes.”