One of the big questions for 2022 is whether or not we’ll see movement on the BD front toward more deals and acquisitions.
The primary driver here is the need to add significant new programs that can lead to important approvals in the 2025 to 2030 period. But with the IPO market flattened and a host of public biotechs struggling, will Big Pharma see greater opportunities to spread the hundreds of billions of dollars analysts have tracked in their cash caches?
So now that the Q1 reports are rolling out, we’ve been gauging remarks around BD. Let’s start with Amgen’s Bob Bradway, who took up the question on Wednesday evening.
We’ve challenged our business development and research teams to find attractive innovation externally that we can add to our portfolio. So we’re looking for things that we can add value to every day in cardiovascular disease as well as in inflammatory diseases and in cancer.
So put Bradway down as a definite yes.
Rob Davis, the CEO at Merck, seems interested, but still isn’t seeing the kinds of bargains that could spur a major surge in M&A. Here’s his remark on Thursday morning.
On the BD landscape question: The short answer is we are not seeing a fundamental shift in seller expectations as of this point. Now, I think as time continues, if we see the market reset to become more permanent and, more importantly, if the IPO market continues to be challenged for biotech companies, that may change over time as companies become more cash constrained there are smaller players that do have cash challenges. So I think that’s where you could see movement first, but fundamentally we haven’t seen a change in the landscape yet, we’ll have to watch.
That doesn’t look like a big endorsement, but Merck has also made it clear that they’re looking for drug assets, so don’t be surprised if they don’t wait for biotech to play ball on their terms.
Sanofi CEO Paul Hudson, who’s been on a deal spree since he arrived at the helm, has been clearly engaged in ongoing talks.
“If we see the right thing, we’ll move, that’s been the same since the very beginning, at least since I’ve been here,” he said Thursday. He also noted:
I think we’ve been pretty disciplined. We’re looking to add to the pipeline, I think we’re building it out right, we’re doing it in the right areas. It’s clear that some prices have fallen, but it’s always been for us about picking the right target and the right asset. It’s never been about size. It’s always been about the right thing, and that hasn’t changed for us. I think that just stays business as usual.
GSK is one of the bigger players to actually do something of size on the M&A side, bagging a drug for under $2 billion just recently. That was a very late-stage deal, reliably headed to regulators, without a lot of R&D risk. That’s in keeping for a CEO who’s been ready to buy, occasionally, but it very conservative with cash.
Emma Walmsley sounds ready to do more of these deals. Earlier this week, she said:
First of all, on BD, we have both appetite and capacity. I think we have been extremely consistent in emphasizing that our number one priority continues to be the strengthening and the execution of the pipeline, that we expect to complement that with business development as well as driving forward our organic portfolio, obviously delighted with the latest news on Sierra.
If you take a step back, this is across our vaccines and specialty portfolio. We want to pursue things that are in line with our strategy, in line with our key therapy areas and obviously with due financial discipline depending on the stage of it, whether it is IR, NPV or with the latest stuff CFROI. So a lot of focus there.
I mean just if you think about it, even in the first quarter, obviously, we have made some moves in oncology.
We’ll keep adding to this as we go through the big roundup of calls. Let us know if you’ve seen anything we should pick up on.
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