The difficult financial landscape may have dampened biopharma M&A but biotech partnering remains robust and crucial to bring innovation to industry, say Roche and Novartis.
The last two years saw some of the lowest levels of M&A in the pharma space since the 2008 financial crash. Meanwhile, the industry has seen private funding dry up, and further problems are on the horizon following the recent Silicon Valley Bank (SVB) collapse and the ongoing crisis at Credit Suisse.
“It’s been a torrid time for biotechs,” said Melanie Senior, healthcare writer & analyst at Nature Biotech, introducing a panel at BIO Europe Spring this morning. “When I spoke to biotechs and our investors at the beginning of last year, everyone was incredibly hopeful that robust M&A would save the day and would provide exits and money where the investors weren’t. I think it’s fair to say that didn’t happen.”
Dealmaking has picked-up somewhat so far in 2023, with Pfizer’s $43 billion planned takeover of Seagen and Sanofi’s smaller $2.9 billion acquisition of Provention Bio helping make M&A levels at already more than half that of the full year 2022.
“I actually expect M&A to continue but in a very focused manner” Susanne Kreutz, global head of Corporate & Business Development at Novartis told the crowd in Basel, Switzerland. She added the deals are likely to focus on the “very few admittedly high quality, high impact late-stage assets,” along with those “where reimbursement of securable, or regulatory paths are clear.”
Instead, “there will be a massive emphasis on partnering this year and probably for the years to come,” she said. “With the continued difficult funding environment, I think licensing deals, particularly for earliest stage assets, are a wonderful solution for biotech companies. It’s a win-win situation for both parties involved.”
James Sabry, global head of Pharma Partnering at fellow Basel-headquartered pharma giant Roche, agreed, and while the financial landscape may cause M&A numbers to fluctuate, partnerships will continue to flourish so long as innovation continues.
“We’re going through a down cycle right now, but let’s be clear, it’s a cycle. It doesn’t mean the end of the biotech industry, it doesn’t mean the end of innovation, it doesn’t mean the end of the pharmaceutical industry. It’s a downward cycle.”
He argued the size of the downward cycle reflects how far industry has come over the past few years. “Although most biotech companies now are having difficulty in financing, both on the private side and the public side, the other thing has happened over the last four or five years is that some tremendous innovations have occurred.”
He continued: “The best structure for innovation in our industry is a biotech company. You guys are much better at doing that than large pharma companies are, and even though companies like Novartis and Roche spend a lot of money on R&D and have some fantastic programs internally, the majority of what they eventually market – and what’s in the pipeline – has come from you.”