Out with the old, in with the new

January is here again and for pharma and biotech, that signals biotech’s biggest annual conference, JP Morgan (being held virtually again this year), reviews of the year just past and predictions for biotech and pharma M & A activity over the coming year.

Here’s a summary of what some of the "experts” are saying:

Evaluate notes that pharma M & A activity in 2021 was the lowest since 2017. It points the finger at the US competition watchdog, which flagged early in 2021 that it would more closely scrutinise mergers that might result in excessive pricing power.

Pharm Exec attributes the underperformance of the biopharma sector in 2021 to what it calls the Democratic “trifecta” – a Biden administration targeting drug price reform, the threat of FTC crackdown and an FDA undergpoing drawn out transition, leaving sentiment decidedly negative. Pharm Exec also blames a macro-driven rotation from growth stocks into depressed value stocks. This trend commenced in February last year and saw the small to mid-cap biotech sector down 22% for the year.  Looking forward, it sees a brighter outlook for the biotech sector in 2022 with the Biden drug pricing crackdown campaign losing teeth, subsiding concerns over the US competition watchdog and a newly appointed FDA Commissioner. Further, Pharm Exec questions whether there might not be a reversal of the trend of rotation into value stocks, as seen in 2021, back into growth stocks.

Fierce Biotech is predicting more of the same for biotech dealmaking in 2022. It argues that the ongoing trend of virtual conferences means that small biotechs have fewer opportunities to run into an pharma exec who can change the direction of their company.

Torreya analysts believe that big pharma M & A was down in 2021 mainly due to the high valuation of biotechs (large biotechs and pharma were not battered like small to mid-cap biotechs in 2021).

SVB Leerink analyst, Geoffrey Porges, sees 2022 as ripe for biotech M & A. He notes that the recent trend of pharma divestment has created massive cash reserves for pharma to do more deals. He estimates that 18 large-cap U.S. and European biopharmas will theoretically have about US$1.72 trillion in M & A firepower by the end of 2022.

Piper Sandler analysts believe that 2022 will be a big year saying “M & A stars appear aligned…like no other time.”

RBC Capital Markets analysts believe that “a rebound in M&A is imminent,” given the large cash reserves of pharma, looming patent cliffs and currently trimmed valuations of small- and mid-cap biotechs.  The analysts expect single-asset companies in mid- to late-stage clinical development, valued at around $1 bn to $5 bn, to be the “sweet spot” for most M & A in 2022.

High profile biotech industry investor, Brad Loncar, is predicting a mega year of M & A for 2022, citing pharma’s massive cash reserves, deals unchallenged by the US competition watchdog in 2021 and lower biotech valuations.


https://www.evaluate.com/vantage/articles/news/deals/biopharmas-buyout-year-ends-bang-0
https://www.pharmexec.com/view/could-2022-prove-to-be-better-year-for-biotech-companies
https://www.pharmexec.com/view/biotech-stocks-continue-with-underperformance
https://www.fiercebiotech.com/biote...ech-dealmaking-2022-but-omicron-coming-anyway
https://www.fiercepharma.com/pharma...ers-look-for-bolt-deals-or-large-transactions
https://endpts.com/the-2022-wave-co...-satisfy-its-growing-appetite-for-biotech-ma/
https://www.barrons.com/articles/biotech-stocks-outlook-2022-51641219807
https://www.biospace.com/article/top-biopharma-m-and-a-activity-in-2021/?s=79
https://www.*.com/brad-loncar-biotech-investor-predictions-for-2022-2021-12?r=AU&IR=T