Biopharma M&A activities suffered a slowdown in 2020. One could argue that 2019’s megadeals consumed some of last year’s quota, and COVID-19 definitely didn’t help. But AstraZeneca’s $39 billion deal for Alexion Pharmaceutical and Gilead’s $21 billion acquisition of Immunomedics showed the appetite for dealmaking is still there.
Here, we rank the top 10 biopharma M&A deals announced in 2020 by deal value, with the AZ and Gilead transactions headlining the list.
Combined, these 10 deals saw about $97 billion worth of biopharma assets changing hands, a tally that was no match to the nearly $207 billion we recorded for the 2019 cohort. By PwC’s count, total life science deals—including those in medtech and contract services—dropped nearly 50% in value in 2020 versus 2019.
But industry watchers are optimistic that 2021 will see a rebound in biopharma deals, and it’s not just because companies have largely straightened out their internal operations during the pandemic to be able to look outside again.
“What’s important are the fundamentals. Big Pharma companies have the balance sheets to deploy against M&A, and the need to go into therapeutic areas where they can create eminence,” Arda Ural, Ernst & Young’s Americas industry markets leader for health sciences and wellness, said in a recent interview.
As of December, PwC estimated that the industry had $1.47 trillion in capital that could be directed toward M&A. While the number was down 6% over 2019, it showed the industry still has enough firepower to unleash, Sky Milch, PwC’s U.S. pharmaceutical and life sciences deals leader, said in an interview.
If 2019 and 2020 are any indication, oncology will continue to be the main theme of biopharma M&A deals, with immunology and cardiovascular also on the list as probable targets.
Cell and gene therapy might also continue its hot streak. Following Novartis’ $8.7 billion acquisition of AveXis, Roche’s $4.3 billion deal for Spark Therapeutics, and Astellas’ $3 billion Audentes Therapeutics buyout in the past few years, 2020 once again witnessed a spending spree featuring gene therapy.
Apart from Bayer’s potentially $4 billion play for Asklepios BioPharmaceutical in our report, Eli Lilly’s $1 billion deal for Prevail Therapeutics, UCB’s acquisition of Handl Therapeutics, Novartis’ Vedere Bio deal and CSL’s purchase of a uniQure hemophilia B therapy are all focused on gene therapies.
While biopharma companies have the need and capacity to pull off M&A, megamergers such as that between Bristol Myers Squibb and Celgene may be rare if not obsolete for a few years now that the White House is welcoming a Democratic president.
Several multibillion-dollar mergers in the prior years have struggled with U.S. antitrust reviews. While BMS-Celgene, AbbVie-Allergan and Mylan-Pfizer’s Upjohn eventually cleared the Federal Trade Commission after product selloffs, the Democratic commissioners at the agency have made their dissatisfaction clear. Instead of specific product-by-product reviews for potential anticompetition concerns, they are rooting for a broader examination of company behaviors such as drug pricing, which could mean additional hurdles for mergers between large firms.
Before 2021 fully unfolds, let’s look once again at 2020’s biopharma M&A crop. Our list only includes straightforward company or product takeovers related to drugs and excludes licensing deals or partial stake purchases.
The ranking is based on top-line deal value at the time of announcement, and only the upfront payment is counted. Therefore, some heavily backloaded deals, such as Novo Nordisk’s acquisition of France’s Corvidia Therapeutics, didn’t make the cut. In Novo’s case, its $2.1 billion deal potential is led by just $725 million upfront.
We also didn’t include Takeda’s $2.3 billion divestiture of its Japan consumer health business to Blackstone because it went to private equity—the same reason we excluded Nestlé’s $10 billion spinoff of Galderma in 2019.
As always, feel free to reach out if you have comments or insights to share. — Angus Liu
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