Samjong KPMG "Global Pharma and Bio M&A Volume $963.2 Billion Over 5 Years"

Report Published: 'Biotech Companies' Business Opportunities Seen Through Big Pharma M&A Trends'
"Global Rare Drug Market Expected to Grow at an Annual Rate of 10.8%"

As growth stagnation is expected due to the patent expiration of blockbuster drugs and drug price reduction negotiations under the Inflation Reduction Act (IRA), global major pharmaceutical companies (Big Pharma) have been actively pursuing mergers and acquisitions (M&A) in the fields of oncology, rare diseases, and obesity since the second half of last year.

According to the report "Business Opportunities for Biotech Companies Seen Through Big Pharma M&A Trends" published by Samjong KPMG on the 8th, the scale of global pharmaceutical and biotech M&A transactions reached $963.2 billion from 2019 to last year. Over the past five years, 10 pharmaceutical and biotech companies among more than 390 investors accounted for 57.7% of the total transaction amount.

Examining Big Pharma M&A trends during this period, large-scale transactions were concentrated in biotech companies in the oncology and rare disease sectors. In the oncology field, the acquisition of Celgene by BMS in 2019 was the largest mega deal within the past five years. Last year, Pfizer completed another big deal by acquiring Seagen, accounting for 25% of the total transaction amount.

Last year, the global rare drug market size reached $206.8 billion and is expected to grow at an average annual rate of 10.8% to $345.9 billion by 2028. Big Pharma is investing in biotech companies at the commercialization stage, including innovative new drugs and FDA-approved products, to secure a leading position in the rare disease market. Investments are being made not only at the commercialization stage but also across the entire rare disease spectrum, from clinical candidates to platform technologies.

As business opportunities for biotech companies expand, the report also presents response strategies for each stage of the value chain. First, biotech companies need to focus on differentiated platform technologies by disease. There is a growing demand for platform technologies that can derive multiple new drug candidates by applying them to existing drugs or new targets during the basic substance discovery and technology development stages. Platform technologies have great pipeline (new drug candidates) scalability in the new drug development stage, and if the technology’s efficacy has already been validated, it can accelerate clinical entry.

In the early clinical stages, the market value of candidate substances with efficacy data expands, and biotech companies holding clinical candidates attract attention in metabolic and rare disease fields. If significant data based on global clinical results for a specific candidate substance are accumulated during Phase 1 or Phase 2 clinical trials, business opportunities with global companies are likely to increase. Last year, acquisitions at Phase 3 and commercialization stages accounted for more than 60%, highlighting a tendency to acquire companies that can reduce risk and produce results in a short period.

With the emergence of so-called "Big Biotech" companies that surpass the corporate value of Big Pharma, bolt-on deals are also increasing. Consequently, biotech companies with pipelines capable of generating revenue models have emerged. Biotech companies entering the late stages of new drug development also need strategies to mitigate overall risks, including funding, not only development, to increase the probability of success as a business model.

Byungjun Ko, Partner of the Financial Advisory Division at Samjong KPMG, said, “Investments in rare drugs, ADCs, and obesity treatments are active in the global pharmaceutical and biotech investment market,” adding, “Biotech companies need to actively implement various strategies to expand their business and enhance competitiveness at each stage of the value chain, from basic substance discovery and core technology development to market approval.”

This content was produced with the assistance of AI translation services.