A deal in the making

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Drug Discovery World Editor Reece Armstrong looks at how a number of deals in pharma have sparked excitement in the industry. 

A number of recently announced deals by pharma companies has brought some excitement back into the sector after a rather stagnant period of activity.  

At the start of June, GSK announced it would be acquiring biopharmaceutical company Affinivax in a deal potentially worth over $3 billion. This follows the company’s previous announcement that it would acquire Sierra Oncology in a deal worth $1.9 billion.  

And in May, Pfizer announced it would be acquiring the biopharmaceutical company Biohaven, which has a pipeline of therapies targeting migraines, for the sum of $11 billion.

Deals such as these will surely be welcomed by the industry, especially at a time when valuations have been falling. For example, the XBI index has fallen back to pre-pandemic levels and likely has investors worried.  

2021 was always going to be a tough year to beat in terms of investment levels, which were largely driven by Covid-19 vaccines and antivirals, alongside other innovations such as diagnostics and advanced therapy medicinal products (ATMPs). Indeed, the US and European biotech sectors saw record levels of revenue generated at $217 billion1. However, whilst revenues generated were high, valuations for mergers and acquisitions (M&A) were down 29% compared to 2016, indicating that the industry is still in a period of uncertainty regarding growth prospects.  

For biotechs and early-stage companies this is particularly worrying as they face challenges in raising funding and maintaining strong valuations. The light at the end of the tunnel for many of these companies is the prospect of being acquired by a larger organisation – but with prospects dwindling, investment and valuation will be key for many companies in order to survive.  

What’s interesting is the directions companies are taking after multiple years of a pandemic. GSK’s venture with Affinivax details just how committed the company is to the vaccines market. GSK is likely hoping that the Affinivax’s pneumococcal vaccine candidate can challenge Pfizer’s Prevnar product, which underperformed in 2021 but still managed to bring in $1,302 million worth of revenue for Pfizerin Q4 alone of that year.

Pfizer’s acquisition of Biohaven on the other hand sees the company investing in the neuroscience market through Biohaven’s approved product for the treatment of migraine. Indeed, Biohaven’s lead product Nurtec ODT has already been approved in both the US and the EU. However, Pfizer’s ambitions of growing the brand to $6 billion in sales3 is definitely ambitious considering Biohaven only managed to bring in $123 million in Q1 of 20224. 

The demand is there though and calcitonin gene-related peptide (CGRP) antagonists – as Nurtec is – are thought to represent major growth drivers for the migraine market. And whilst the use of generic products will always act as competition for migraine therapies, the fact that the market is estimated to grow to $5.63 billion by 20275 shows that there is room for growth in this sector.  

With the US Federal Trade Commission (FTC) looking into antitrust practices alongside with international partners, and placing a specific focus on M&A deals within pharma, the industry could be deterred from investing too heavily in companies with promising IP.  

Time will tell if the deals by GSK and Pfizer represent the start of more consistent M&A activity this year, or whether they are simply a blip in a protracted period. Needless to say the future is uncertain.  

Volume 23 – Issue 3, Summer 2022


1: https://www.ey.com/en_us/life-sciences/beyond-borders 

2: https://investors.pfizer.com/Investors/Financials/Quarterly-Results/  

3: https://www.fiercepharma.com/pharma/pfizer-buys-migraine-partner-biohaven-116b-betting-cgrp-drugs-grand-return-neuroscience  

4: https://www.prnewswire.com/news-releases/biohaven-reports-first-quarter-2022-financial-results-and-reports-recent-business-developments-301543370.html  

 5: https://www.marketdataforecast.com/market-reports/migraine-drug-market  





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