While access to capital funding remains elusive for many biotechs and the macroeconomic environment remains uncertain due to tariffs, M&A remains strong and should ramp up in the second half of the year, according to pharma dealmakers, venture capitalists, and market observers.
While "tariffs sucked a lot of oxygen from industry in the last couple of months," that is poised to change later this year, according to EY Americas Life Sciences Sector Leader Arda Ural. He added he expects that negotiations over tariffs to get settled in the next few months, the tax bill under consideration in Congress to provide benefits for the pharma and biotech industries, and the Federal Reserve will cut interest rates in September.
Ural was speaking as part of a panel on the environment for capital markets, transactions, and financing at the BIO International Convention in Boston Wednesday. The panel also coincided with Wednesday's release of the EY Biotech Beyond Borders 2025 Report
Bristol Myers Squibb (NYSE:BMY) VP, Corporate Development Ryan MacDonald said that despite the economic uncertainty, it's business as usual at the pharma giant in terms of pursuing deals. He added that Bristol is looking to find transformative and best-in-class therapies across its core therapeutics areas. "Our desire to invest in...innovative medicine is as high as it's ever been."
Marian Nakada, VP, Venture Investments at Johnson & Johnson (NYSE:JNJ) Innovation added that J&J is especially interested in deals centered around oncology as advances in CAR T cell therapies, radio conjugates, and antibody-drug conjugates have really taken off.
M&A activity will also pick up because a number of large pharma companies are facing loss of exclusivity for some of their major money-making drugs in the coming years, necessitating new assets to replace the upcoming loss of revenue, noted Paris Panayiotopoius, senior managing director with Blackstone Life Sciences Group.
He added that genomics, proteomics, and targeted therapies across multiple therapeutics areas, combined with the increasing use of AI tools in drug development, bodes well for dealmaking.
Echoing this sentiment, biotech entrepreneur and venture capitalist Gregory Verdine, who is also CEO of Lifemine Therapeutics, said, "We are right now in the golden age of opening up vast swaths of therapeutic opportunities that we didn't have the tools to go after them" before.
Despite the optimism over M&A, panelists were less sanguine about the IPO market.
Bristol's MacDonald said that the market for IPOs "is pretty shut off," adding that in a tight financing environment, IPOs are the last to recover.
"I don't think we're anywhere close to a resurgence of the IPO market," added Verdine. "That's at least a year away."
The EY report is also pessimistic on the outlook for the biotech IPO market. EY data indicates that after the number of biotech IPOs in the U.S. and Europe peaked in 2021 at around 150, it fell to about 15 in 2022. In 2024, the figure was around 30. However, at the end of 2024, only eight of the 30 were trading above the closing price on their initial closing date.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.