Future patent expiries and the speed of scientific progress will keep both M&A and alliances firmly on the agenda.
In 2022, high deal premiums will continue to be an obstacle for big biopharma buyers. Late-stage or marketed assets with strong clinical data will continue to command high prices, particularly in competitive therapy areas such as oncology. Yet some of the largest companies have significant cash resources to deploy for M&A and there could be increasing pressure to use it to establish beachheads. Such acquisitions would reverse the declining trend for biopharma deal value witnessed in the past two years.
However, a majority of companies won’t have the capital — or the desire — to buy leadership positions. As a result, alliances will be the primary priority.
For these reasons, the strategies deployed in 2022 will be a continuation of those used in 2021. Companies will:
- Favor bolt-on deals rather than risking megadeal spending for uncertain rewards
- Seek divestments to free up capital to execute M&A
- Prioritize partnering and strategic collaborations, including strategic relationships that more equably share risk and reward between deal parties
In such an environment, M&A may find itself playing a supporting role, as more biopharmas pursue smarter, earlier, strategic partnering to achieve their growth goals.
With ample Firepower to do deals, biopharma companies will focus on bolt-on deals and partnering, while seeking divestments to free up capital for growth objectives.