The pharmaceutical industry has witnessed a dramatic decline in deal activity, reaching its lowest point in nearly a decade as major drugmakers pivot away from commercially ready medicines towards early-stage drug development investments.
By late November, industry giants including Eli Lilly, Novartis and Vertex Pharmaceuticals had completed just 558 deals globally, with a combined value of £67.2 billion. This marks the lowest level for this period since 2016, according to London Stock Exchange data.
The year’s most significant biotech acquisition – Vertex’s £4.9 billion purchase of Alpine Immune Sciences – stands in stark contrast to Pfizer’s £43 billion takeover of Seagen in 2022. The total value of deals has plummeted to half of last year’s figures, reflecting a cautious approach from industry leaders.
Investment specialists attribute this slowdown to pharmaceutical companies digesting previous acquisitions and the elevated valuations of listed biotechs deterring potential buyers. The industry faces mounting pressure as an anticipated £59 billion in sales are at risk when 190 drugs lose exclusivity by decade’s end.
The political landscape has also influenced deal activity, with the tough antitrust environment under Lina Khan’s Federal Trade Commission causing hesitation. However, industry experts suggest a potential Trump presidency could reinvigorate healthcare mergers and acquisitions.
Despite these challenges, pharmaceutical companies have maintained their appetite for smaller acquisitions below £5 billion, particularly favouring private companies. Danish pharmaceutical firm Lundbeck’s acquisition of neuroscience start-up Longboard for £2.6 billion exemplifies this trend.
Looking ahead to 2025, dealmakers express optimism for increased activity, though the sector remains watchful of potential policy changes and their implications for future mergers and acquisitions strategies.
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