The current pandemic has caused a major decrease in big money investments into mergers and acquisitions. Could company collaborations be the skeleton key needed to drive life sciences?
Not unexpectedly, the pharmaceutical and life sciences sector (PLS) has seen a dramatic decline in merger and acquisition activity in the first half of 2020. Key players normally driving that action are focused on internal resources, instead directing all manpower and funding into COVID-19 research, vaccines and treatments.
This PwC analysis shows a whopping 87.2% decrease in deal values for H1 2020 when compared to H1 2019. According to their data, 99 deals have been bargained with a total $35 billion in value, compared to the $272.9 billion of 2019’s first half.
Volume by number of deals is only down around 17% (119 in H1 2019 vs. 99 in H1 2020). So deals are still being made, just not any mega-deals like what was seen in 2019.
Last year Bristol Myers Squibb completed one of the most expensive biopharma acquisitions in the history of the pharmaceutical industry. In November 2019, BMS completed their $74 billion buy of Celgene, making it the largest PLS acquisition in the last 20 years. Abbvie also joined the ring of mega-acquisitions of 2019 with their $63 billion deal to acquire Allergan.
Contrast that with 2020 for a much less exciting picture. BioSpace found that PwC’s data is actually even higher than reality for 2020 as they are showing numbers from M&A agreements, not necessarily completed transactions. The biggest anticipated deal for the year was Thermo Fisher’s acquisition of Qiagen at $11.8 billion. Announced in March, that deal fell through in August when their offer lapsed.
That leaves us with even lower value for H1 2020. Taking out the Qiagen deal, the numbers now fall in at $23.2 billion. This drops our comparison from H1 2019 to a massive 94% decrease.
In January, hopes were high for the year to be another powerful push for PLS buys. 2019 ended the year with a record-setting $357 billion in life sciences deals, surpassing the previous high set in 2014.
“2019 has been a ‘mega’ year driven by pharma buyers,” said EY consultant Peter Behner at the beginning of the year. “In 2020, firepower remains plentiful and we expect to see more activity in medtech and big biotech, with megamergers coming from companies with acute growth gaps.”
Then COVID-19 hit and while many pharma and biotech companies began even more strenuous work racing to create testing and vaccines for the novel coronavirus, big buying deals clearly slowed way down. Instead, we’ve seen more PLS companies forming collaborations to move desperately needed research and development along at a much faster rate than they’d accomplish alone.
Sanofi and GlaxoSmithKline (GSK) teamed up to deliver up to 600 million doses of their COVID-19 vaccine to the U.S. Front-runners Pfizer and BioNTech are hoping to be the first in the race to deliver their vaccine to the U.S. by the end of 2020. Across the globe, Novavax reached an agreement with the Serum Institute of India to increase Novavax’s production capacity to over 2 billion doses annually.
These collaborations have the potential to accelerate the speed of scientific R&D, leading to propelled growth and innovation in global medicine.
