Reading the Tea Leaves on Recent Surge in Pharma Dealmaking

PC: What’s your feeling on the recent uptick in biopharma M&A and biotech IPO activity as far as influencing and stabilizing prospects for the rest of the year?

Tritschler: Many players show interest in M&A and licensing deals. There are large amounts of capital on the sideline ready to be invested. Looking at the numbers, this year we're slightly ahead of last year; looking at the first two months year over year. But we expect to see a significant growth in the remainder of 2024. Time will tell if this initial uptick will further substantiate and continue throughout the year, especially if we're going to see bigger volumes and bigger transactions again later in the year. We could observe, however, that there has been a change in investment strategies of the different players, particularly big pharma in increasing their focus on lower-risk, later-stage, smaller deals in 2023 and so far this year.

These adjustments of the overall strategy potentially prevailing in 2024, we’ll have to see how this further develops. But, overall, very positive momentum that we’ll see more deals happening again. There was a very positive outlook at the JPM event in January. Even despite the uncertainties with still-high interest rates, we are very bullish and positive for the year when it comes to transactions in the pharmaceutical industry.

The companies have a lot of interest and want to invest in these [startup and emerging] companies. The valuations were in a boom in the 2020 and 2021 timeframe, and those came come down more in 2023, where we saw more of the bottom of the valley. With these valuations, companies are lining up to purchase good opportunities in the market that fit their strategic portfolios, and building them out.

For more on the changing trends in life sciences dealmaking, read our industry outlook analysis here.