Big Pharma’s Signing Off On Big Deals

Big Pharma’s Signing Off On Big Deals
Daniel Johnston

6 months ago2 mins

What’s going on here?

Data shows Big Pharma’s been signing off tons of deals this year – if you can read the handwriting, that is.

What does this mean?

Deals haven’t been dealt much this year, with companies more focused on slimming costs to survive these dicey days. So Big Pharma’s really standing out, pouring $85 billion into acquisitions during just the first five months of the year. That’s more than the industry’s spent on deals in the same timeframe for the last couple of years. But this isn’t just retail therapy: the patents of many pharma firms’ best-selling drugs are due to expire fairly soon, which would leave them vulnerable to generic drug-making competition. One solution is to fortify their pipelines with new drugs, and the firms certainly have the funds: the world’s biggest pharma companies held more than $1.4 trillion from pandemic-crazed sales between them at the start of the year.

Pharma spending surges

Why should I care?

The bigger picture: Not quite a cure-all.

Regulators are clamping down though, suing to block Amgen’s $28 billion takeover of Horizon Therapeutics last month. Keep that up, and innovation could be squeezed dry. See, a major reason investors buy into small biotech firms – outsized contributors of high-risk drug research and development – is the hope that a bigger firm will snap them up later. But if dealmaking’s under threat, the little guys might not get the investment they need to make the drugs of tomorrow.

Expiring patents

Zooming out: Diamonds in the generic drug rough.

Still, that wasn’t enough to put Novartis off: the drugmaker agreed on Monday to buy Chinook Therapeutics for over $3 billion. The deal could bring two promising rare kidney disease treatments to market, and soon: one of them’s due to report results in the next few months. And because rare disease treatments tend to have a high price tag, the twosome could work magic on the firm’s bottom line.



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