Thank for that Hottod. Here's the full article for those...

Thank for that Hottod. Here's the full article for those interested.

Interesting comments about Pfizer looking for early to mid-stage start-ups

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Executives at Pfizer Inc., PFE 0.61%increase; green up pointing triangle Merck MRK 2.83%increase; green up pointing triangle & Co. and Novartis AG NVS 1.27%increase; green up pointing triangle said they are looking for promising drugs to add to their pipelines and replenish sales as top-selling products lose patent protection in the coming years.

Meanwhile, AbbVie Inc. ABBV 1.19%increase; green up pointing triangle is lifting a self-imposed $2 billion limit on the size of deals it would do to add more products.

The acquisitions could help the companies add new sales to aging lineups and suggest this year could be a busy one for industry dealmaking.

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“We do have a portfolio of opportunities we are continuing to look at,” said Merck Chief Executive Rob Davis. “When the science and the value align, we will act.”

After several years of heavy deal making, big pharmaceutical companies dialed back acquisitions more recently. They had bought many of the most attractive targets, and those that remained had gotten very expensive.

The $88 billion in total deal value last year, involving 75 biopharma tie-ups of at least $100 million, was the lowest since 2017, Ernst & Young said.

Yet by the end of last year, EY estimated, life-sciences companies had more than $1.4 trillion in cash and other capital they could use for deal making, up 11% from the previous year.

“It is pretty ripe for robust M&A in 2023,” said Subin Baral, EY’s global life sciences deals leader.

Last year closed with an uptick in deal activity. Several large pharmaceutical companies looked at rare-disease drugmaker Horizon Therapeutics PLC, which Amgen Inc. eventually agreed to buy for $27.8 billion.

Behind the deal search is a need for new products. Several big-selling drugs, such as Amgen’s osteoporosis remedies Prolia and Xgeva, are expected to face in coming years lower-priced versions that will cut into sales.

AbbVie CEO Richard GonzalezPHOTO: ZACH GIBSON/BLOOMBERG NEWS

AbbVie’s top-selling drug, an immune therapy called Humira, just started to face lower-priced versions.

The company doesn’t need to make deals, said AbbVie CEO Richard Gonzalez, but has the capacity to make acquisitions if it finds drugs that fit and are of interest.

Lower-priced competitors are expected to cost big drugmakers large chunks of sales. The companies will lose 24% of their global sales, or about $110 billion, between 2023 and 2030 because of the loss of patent exclusivity, JPMorgan Chase & Co. estimated.

“They will need to acquire fresh revenues that they don’t have today,” said Eric Tokat, a partner at Centerview Partners LLC who advises biotech companies on deals. “There is a lot of appetite. People want to do deals, and I think we’ll see deals.”

Big companies this year are likely to seek drugs that can treat heart, neurological and immune diseases that can affect large groups of patients, Mr. Tokat said.

The prospect of antitrust scrutiny as well as macroeconomic conditions such as high interest rates could pose challenges to getting deals done, according to analysts.

Pfizer has set a goal of adding $25 billion in revenue by 2030 from business-development moves including acquisitions. The moves could help the company offset an estimated drop of roughly $17 billion in sales from patent expirations.

The drugmaker is about 40% closer to meeting its goals, Chief Financial Officer David Denton said, partly because of recent acquisitions of sickle-cell-drug maker Global Blood Therapeutics Inc. and the remaining stake in Biohaven Pharmaceutical Holding Co.

For further deal making, Pfizer has $36 billion in cash from sales of Covid-19 vaccines, drugs and other products.

Mr. Denton said Pfizer is now skewing its search toward drugs in early- to midstage testing, because it doesn’t see many biotech companies with the kinds of approved or late-stage therapies for which Pfizer could help add value.

Novartis is focused on potential acquisitions that could fetch biotech companies valued at $5 billion or lower with drugs in early- to midstage development, said CEO Vas Narasimhan.

“If we can make acquisitions there, then we can participate in the upside” of the drugs, he said.

Dr. Narasimhan said Novartis is looking to add to its portfolio of heart, neurological, cancer and immune drugs, or assets that use cutting-edge technologies such as cell and gene therapies and RNA-based therapeutics.

Some of the Swiss drugmaker’s bestselling drugs are expected to lose patent protection and face lower-priced competition later this decade, including heart-failure drug Entresto, which had $4.6 billion in global sales last year.

Merck is facing a potentially major drop in revenue if its top-selling cancer treatment, Keytruda, which totaled roughly $21 billion in global sales last year, loses U.S. patent protection in 2028 as expected.

Merck will be active in deal making in 2023, looking to diversify its business, with a focus in its main areas of cancer, heart, immune and neurological diseases as well as in vaccines, Mr. Davis said.

Write to Jared S. Hopkins at [email protected]

Appeared in the February 10, 2023, print edition as 'Pfizer, Novartis, Merck Hunt for Deals'.