On 5 November 2024, former US president Donald Trump was elected to a second term in the US presidential election. This marks the return of Republican leadership following President Joe Biden’s administration, which signalled significant policy changes for the biopharmaceutical industry, including the Inflation Reduction Act.
Although Trump did not disclose his intended healthcare policy changes during his 2024 campaign, Trump’s return to the White House may drive biopharmaceutical merger and acquisition (M&A) deal activity with the potential departure of Lina Khan, the current chair of the Federal Trade Commission (FTC). Under Khan’s leadership, the FTC issued stricter guidelines about regulating M&As. For example, the FTC filed a lawsuit against Sanofi’s $750m licensing agreement with US-based biotech Maze Therapeutics in December 2023. Following the lawsuit, Sanofi terminated the licensing agreement involving Maze Therapeutics’ glycogen synthase 1 inhibitor MZE001, which is currently in Phase I trials for the treatment of Pompe disease. Therefore, a change in FTC leadership may encourage more M&A deals by large biopharmaceutical companies, as well as create a more favourable environment for smaller biotech companies to exit via acquisitions. However, it remains uncertain whether Trump’s ‘America First’ foreign policies will impact the ability of ex-US companies, especially those headquartered in China, to acquire US-based biopharmaceutical companies given his enactment of the Foreign Investment Risk Review Modernization Act in 2018, which grants US regulators greater authority to review and restrict foreign acquisitions.
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To bypass Trump’s proposed import tariffs of 60% on goods from China and 20% on imports from other ex-US countries, there may be an increase in M&A deals involving ex-US biopharmaceutical companies seeking to acquire US manufacturing facilities, enabling the domestic manufacturing of drugs to sell in the US market. It remains to be seen how Trump will address the potential increased operational costs and subsequent drug price increases associated with a shift towards US manufacturing.
Furthermore, Trump’s plans to appoint Robert F Kennedy Jr, who is known for his anti-vaccine stance and criticisms of the Food and Drug Administration, as the head of the US Department of Health and Human Services may create challenges for future US drug approvals, which could dampen investor confidence and slow innovation in the biopharmaceutical industry.
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