M&A activity among pharma and life sciences companies is expected to remain robust in 2023 despite broader economic headwinds, according to a PricewaterhouseCoopers report released this week.
The report noted that the total deal value in 2022 was $137.8 billion, marking a 49% drop off compared to 2021, while the deal volume fell 28% over the same period. PwC estimated that the total deal value would be in the range of $225 billion to $275 billion.
PwC stated that since pharma and life sciences brands have “ample corporate cash” on hand, there is an expectation that companies will make investments to address medium-term pipeline gaps and reset biotech valuations that ballooned last year.
The report also stated that since the midterm election results are decided and aspects of the Inflation Reduction Act are better known, companies should face less uncertainty in 2023 compared to 2022.
“We expect to see activity in areas of high expected future growth in 2023,” the report stated. “Pharma and biotech M&A will continue to focus on oncology and immunology, but other areas such as central nervous system and cardiovascular diseases as well as vaccines will see interest. We expect that the market will place a significant premium on therapeutic area leadership.”
Looking at industry subsectors, PwC projected that pharma and biotech M&A activity will continue to focus on the oncology and immunology spaces. Meanwhile, the medtech sector faces declining deal values and uneven capital market performances, though the services sector is slated to see healthy M&A levels next year.
PwC’s analysis is yet another glimpse into the challenging nature of 2022 for healthcare dealmakers.
In the spring, KPMG issued a report that found that healthcare M&A activity in Q1 2022 declined by 34% year-over-year, which the organization attributed to a variety of factors including rising interest rates and macroeconomic headwinds.
Some of the largest deals mentioned in the report were Johnson & Johnson’s planned acquisition of Abiomed for $18.9 billion, Pfizer’s deals to buy Biohaven Pharmaceuticals and Global Blood Therapeutics, as well as Bristol-Myers Squibb’s purchase of Turning Point Therapeutics.
The report was also released days after Amgen announced that it is acquiring Irish rare-disease biotech Horizon Therapeutics for $28.5 billion, making it the year’s largest deal.