By Alex Philippidis Viewed simply by numbers of merger and acquisition (M&A) deals, 2023 was a down year: 1,078 biotech companies found buyers last year, down from 1,088 in 2022, while the number of pharma companies carrying out buyouts fell more significantly, from 778 two years ago to 679.
These numbers come from LSEG, the global financial markets infrastructure and data provider that owns the London Stock Exchange. LSEG’s data also reveals marked increases in the dollar values assigned to the biotech companies and pharma companies that are being acquired. The total value of biotech M&A in 2023 stood at $122.2 billion, up 45% from $84.2 billion a year earlier. The total value of pharma M&A jumped 38% year over year, from $98.5 billion in 2022 to $135.5 billion in 2023.
The final quarter of 2023 saw M&A activity heat up, with no fewer than nine announced acquisition deals of $1 billion or more. The largest of these (and the second largest transaction announced in 2023) saw Bristol Myers Squibb (BMS) agree to acquire neuro drug developer Karuna Therapeutics for $14 billion, a deal set to close in the first half of 2024. BMS was very busy in Q4 2023, as it also announced plans to buy out radiopharmaceutical drug developer RayzeBio and oncology drug developer Mirati Therapeutics. The former proposal is set at $4.1 billion; the latter, up to $5.8 billion ($4.8 billion plus another $1 billion in milestone-based contingent value rights).
The M&A revival reflects buyers’ need to generate new revenue and replenish pipelines as longtime blockbusters lose patent exclusivity—as well as buyers’ ability to fund deals as capital set aside for that purpose is at near-record levels.
Another possible reason for the M&A uptick: A jump in FDA approvals of new therapies last year. Indeed, approvals rose 50% last year—from 37 in 2022, to 55 in 2023. The number of Biologics License Applications approved by the agency has risen from 10 in 2018, to 17 in 2023 (same number as in 2018, a year that saw 59 drug approvals).
“If you look at some of the some of the biotech companies that are getting these approvals, then that is really good news for the M&A market, because that really drives interest from the larger buyers either to acquire them or partner with them,” said Subin Baral, global life sciences deals leader, EY. “So, it does play a role in M&A.”
What companies will be among those whose M&A potential is tracked in coming months? Leading candidates are in the following A-List. It includes 10 biopharma companies that analysts and other market watchers have seen as buyout targets in recent months. This list is based on notes to investors and comments in news outlets. For each company mentioned, the list explains where talk of acquisitions has surfaced, and why.
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