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Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
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Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
Learn more
Developing IQVIA’s positions on key trends in the pharma and life sciences industries, with a focus on EMEA.
Learn more
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VIEW ROLESIn our first blog of 2025 on biopharma M&A trends, we will provide an outlook for the year ahead, following a recap of 2024 highlights.
After a decisive rebound in 2023 from pandemic lows, biopharma M&A activity was sluggish in 2024, with aggregate deal value down by 68% vs. 2023, to reach ~$48Bn for the full year, the lowest in our historical period. Average deal size also dropped in 2024 to just $2.1Bn, the lowest level for the past five years (see Figure 1). Note, this analysis only includes transactions involving a biopharma target, with an acquisition of a majority stake in the target entity, and a deal value equal to or exceeding $1Bn.
It was the year of bolt-on acquisitions. The size of individual biopharma M&A deals did not exceed $5bn in 2024, with the $4.9Bn acquisition of Alpine Immune Sciences by Vertex Pharmaceuticals the largest transaction of the year.
Other top-ranked transactions announced in 2024, with deal values ≥$3Bn, include Gilead-CymaBay Therapeutics ($4.4Bn), Lilly-Morphic ($3.2Bn) and Merck-Eyebiotech ($3Bn).
The pattern of M&A deal activity in 2024 showed a decisive shift in acquirers’ focus towards earlier stage targets compared to previous years. Specifically, the value share of commercial-stage transactions plummeted from 56.2% in 2023 to just 8% in 2024, while pre-clinical and phase 1 focused deals together accounted for just over a quarter of total 2024 biopharma M&A value, by far the highest share seen in the past five years. Collectively, pre-phase 3 focused transactions represented almost 50% of total deal value in 2024, significantly above the 19% average for the prior four years (see Figure 2).
The collapse of transactions focused on de-risked, and thus more expensive, commercial-stage targets alongside the rise in early-stage deals explains the modest deal sizes observed for 2024.
An activist Federal Trade Commission may have contributed to acquirers in general becoming more circumspect in 2024 and especially when considering large deals or targets with assets already commercialised, which would likely attract particular scrutiny, e.g., the immediate impact of a potential deal on the acquirer’s negotiating power with payers. Furthermore, the surge in M&A deals focused on commercial-stage targets in 2022 and 2023 left a relative scarcity of available de-risked assets, driving up premiums for sought after targets and thus discouraging potential acquirers concerned about overpaying.
After the promising upswing in dealmaking momentum in 2023, overall 2024 turned out to be a largely disappointing year for M&A involving biopharma targets. However, investment in expanding manufacturing capacity, in particular for GLP-1s, was a major focus in 2024, including via acquisitions, e.g., the $16.5Bn buyout of CDMO Catalent by Novo Holdings, the largest pharma transaction of the year.
While M&A momentum declined in 2024, licensing activity held up and played a key role as a vehicle for accessing innovation, with both deal volume and total deal value stable at 150 and around $170Bn, respectively.
The defining trend of 2024 was the increase in deals focused on in-licensing innovation from China, which accounted for over 30% of assets in-licensed by big pharma last year. This trend reflects the emergence of high quality Chinese assets with strong data in recent years, as illustrated by PD-1/VEGF bispecific ivonescimab, developed by Chinese Akeso Therapeutics and licensed by U.S.-based Summit Therapeutics in 2023, which outperformed Keytruda in a H2H trial in NSCLC.
Prominent examples of in-licensing from China include the Merck-Hansoh deal, giving Merck global rights to develop, manufacture and commercialise oral GLP-1 asset HS-10535 for obesity and worth up to $2Bn; or the Novartis-Shanghai Argo multi-programme deal, giving Novartis rights to several cardiovascular assets discovered by Argo’s RNAi platform and worth up to $4.1Bn.
In 2024, biotech VC investment in the U.S. and Europe reached $28Bn across 470 rounds, an increase in total deal value of 33% vs. 2023. Access to VC funds was unequal, however, with over 100 biotech companies led by experienced executive teams with a track record able to raise mega-rounds of ≥$100m, while smaller, lesser known companies struggled.
Despite some initial buzz early in the year, the IPO window did not materially re-open in 2024, and even several cuts in interest rates failed to significantly buoy IPO activity. In 2024, only 24 biotech companies went public with listings at NASDAQ or NYSE, above the 19 and 22 IPO count in 2023 and 2022, respectively, but in stark contrast to the frenzy of 2020 and in particular 2021, when 79 and 104 biotech companies went public, respectively.
The majority of IPOs in 2024 involved companies with de-risked, mid-to-late-stage assets, in a return to more conventional practice requiring robust clinical validation before going public.
Post-IPO stock performance in 2024 was disappointing, with most of the companies that went public last year trading at or below their offer price, including a number of meltdowns which shook investor confidence. For example, just two months after its IPO, BioAge discontinued its STRIDES phase 2 trial for next-generation obesity asset azelaprag following safety concerns, which triggered a sell-off resulting in a 70% drop of its share price.
With the IPO window remaining essentially closed in 2024, it is not surprising that private companies accounted for over 50% of M&A targets last year.
As 2025 gets underway, the fundamentals in support of dealmaking remain strong:
Notwithstanding these supportive fundamentals, several uncertainties remain which weigh on M&A momentum in 2025.
On the positive side, post-election tailwinds in the U.S. have lifted dealmaking sentiment, for example, removing election uncertainty, the prospect of cuts in corporate tax or the overall shift towards a de-regulatory mindset, including a less activist Federal Trade Commission.
However, there are still numerous unknowns which have the potential to create significant headwinds for dealmakers, for example, the exact details of future health policies; a shake-up of the FDA, its resourcing and existing regulatory processes; U.S. drug pricing, including possible amendments to the IRA or the introduction of new measures to bring down the cost of medicines for Americans; and potential tariffs and their impact on global trade, economic growth and inflation.
Furthermore, the geopolitical outlook for 2025 remains challenging, e.g., the U.S.-China strategic rivalry or the wider deglobalisation, both of which are likely to intensify under a more assertive, inward-focused U.S. administration.
For example, even though the U.S. Biosecure Act did not become law in 2024, it is indicative of the hardening stance on China. This act would restrict U.S. biopharmaceutical companies from doing business with certain Chinese companies, e.g., WuXi AppTec and WuXi Biologics, upon whose CDMO services many U.S. life science companies have become highly reliant. This type of legislation would create new barriers to cross-border collaboration on bio-medical innovation, while driving up the cost of drug development.
The overall mood music at the recent JP Morgan Healthcare Conference was sanguine, however, it did not deliver a frenzy of deal announcements.
J&J’s proposed acquisition of Intra-Cellular caught everyone’s attention as it represents a clean break with the M&A patterns of 2024. At $14.6Bn, this transaction is three times the size of the largest deal in 2024, and it centres on a commercial-stage product, a rarity among M&A dealmaking in 2024. Nevertheless, one sizeable deal does not make a trend.
Two other deals announced at JPM, the respective acquisitions of IDRx by GSK and Scorpion Therapeutics by Lilly, support our earlier thesis of privately held companies opting for an M&A exit in a challenging IPO environment.
Against the backdrop of strong fundamentals facing potential headwinds, as we elaborated earlier, on balance our outlook for M&A in 2025 is cautiously optimistic for the near-term. If most of the remaining uncertainties were to be resolved favourably, 2025 could be the year when M&A momentum returns.
Therefore, at this point in time, we forecast aggregate M&A deal value to reach $50-70Bn in 2025, with a potential upside of $70-90Bn in a best case scenario.
As for acquirers’ therapy area focus in 2025, interest in oncology and immunology targets will likely remain strong, while the approach to obesity will be more cautious and prioritise differentiation as the field is becoming increasingly crowded.
CNS is a potential wildcard, as unmet need is high but acquirers can find recent deal examples for and against the case for a presence in this unpredictable TA; for example, BMS’s success with Cobenfy, the centrepiece of its $14Bn acquisition of Karuna, vs. AbbVie’s recent $3.5Bn write-down on the key schizophrenia asset from its $8.9Bn acquisition of Cerevel Therapeutics following two phase 2 trial failures.
Even though larger M&A deals will likely face fewer challenges from the Federal Trade Commission now, we expect a preference for bolt-on acquisitions to prevail, with typical deal sizes at the mid-to-lower end of the $5-15Bn bracket.
This sentiment was echoed by J&J CEO Joaquin Duato, who noted at the JP Morgan conference that “…as a matter of fact, larger deals are the outliers; …[value] is typically created by smaller deals that don’t make the headlines.”
The authors would like to thank Toby House for his analytical support in developing this blog.
IQVIA Pharma Deals; IQVIA Forecast Link; IQVIA Pipeline Link; Mergermarket; Refinitiv Workspace; company financial reports; company press releases and deal announcements; IQVIA EMEA Thought Leadership desk research and analysis.
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