Following 2023’s stiff economic environment, companies must prioritise partnerships more than ever in their growth strategies, said Richard Girling, a partner at Centerview Partners.
At the Swiss Biotech Day conference, Girling reported that there were 25 transactions greater than $1bn in 2023, surpassing the previous 2021 record of 15 such deals. Held in Basel, Switzerland, the conference gathered peers across the pharmaceutical industry for partnership and discussions surrounding major trends in the space. At the “Decoding Swiss Biotech- Pharma Partnering” panel, Girling and other experts weighed the current pharmaceutical partnering ecosystem.
Girling highlighted a trend towards bolt-on acquisitions, which drove more sustainable growth. Deals like Pfizer’s $43bn Seagen one are an outlier, he said. He also highlighted more movement towards the use of contingent value rights in dealmaking. Contingent value rights are rights given to company shareholders, giving them benefits if a specific event occurs in a deal.
GlobalData reported that there were 426 pharmaceutical mergers and acquisitions (M&As) announced in Q4 2023, reaching a value of $84.2bn. This constituted a 149% increase in M&A activity compared to the previous year.
GlobalData is the parent company of Pharmaceutical Technology.
Girling relayed that companies would have to do more M&As than were previously seen in the space to maintain growth into the new year. He and Mathias Müllenbeck, the head of global business development and alliance management at Merck KGaA, agreed that early partnerships and agreements were an essential growth tool for biotechs. Müllenbeck added that early-stage deals give companies the tools to improve their dealmaking for the later stages when they may make larger transactions in their dealmaking.
“It is more important than ever to think about the market access and commercial potential of a product,” said Müllenbeck. He explained that, in approaching early deals, companies should look at the long-term market value of their therapies and analyse the reimbursement landscape from the preliminary stages.
Brad Robling, vice president of Lilly New Ventures, Eli Lilly’s venture capital investing arm, explained that he “thinks long-term” in Lilly’s dealmaking, forecasting how assets could affect the market in 10-15 years time. Robling added that Lilly is still open to discussions about dealmaking surrounding oncology, cardiometabolic, and immunology assets.
