Rooting for pharma's deal volume to reach 2015's heights? Don't hold your breath, report says

money

Remember 2015, when pharma was shattering deal-volume records? These days, it seems like a pretty long time ago.

In Q3, deal activity has headed south--both in volume and in value--compared with the year-ago quarter, according to PwC’s Global Pharma & Life Sciences Deals Insights Q3 2016 Update. And the decrease in value has been “considerable.”

The reason? Pharma hasn’t seen as many large deals--especially those greater than $1 billion. The industry registered just 7 in the quarter, with Pfizer’s $14.1 billion Medivation buy taking the cake.

Free Daily Newsletter

Like this story? Subscribe to FiercePharma!

Biopharma is a fast-growing world where big ideas come along daily. Our subscribers rely on FiercePharma as their must-read source for the latest news, analysis and data on drugs and the companies that make them. Sign up today to get pharma news and updates delivered to your inbox and read on the go.

And the reasons for that? They include potential interest rate movements and recent attention on drug pricing, which has brought an unwelcome spotlight on more than a few specialty players. As a result, potential acquirers are waiting “to see how this trend develops in the next few quarters,” the authors wrote.

As PwC notes, the recent M&A decline means “deal volumes in the future have the ability to trend upward.” But that doesn’t mean they will.

Instead, what’s more likely is that they’ll stay “depressed” until “uncertainty around general economic factors and industry conditions” are cleared up.

And even if deal volumes head upward again by the end of the year--an event that’s possible, PwC acknowledged, considering that companies including Valeant and Endo are currently assessing their portfolios--2016's total deal value may still look low relative to prior years.

Potential acquirers are becoming “more disciplined with deal pricing” and scouting smaller targets.

If that shift in thinking doesn’t sound familiar, consider Allergan: After last year agreeing to technically buy Pfizer in a record-breaking $160 billion megadeal--later thwarted by the U.S. Treasury--Allergan recently committed itself to vastly smaller “stepping-stone deals,” as CEO Brent Saunders likes to call them.

- download the report

Related Articles:
Pfizer plans to shell out a stunning $14B for Medivation. Will the bet pay off?
Allergan launches $10B buyback, focuses on tuck-in deals
In pharma M&A, 2015 trumps red-hot 2014 so far, report says
Pharma M&A shoots up to $159B for first half, but prices could dampen the mood
Pharma dealmaking boosts M&A to record-setting heights in Q1

 

Read more on

Suggested Articles

FDA officials say Novartis took too long to launch a formal probe into allegations of Zolgensma data manipulation.

Should Johnson & Johnson owe billions to fix Oklahoma's opioid crisis? After weeks of trial testimony, a judge will have his say Monday afternoon.

After Endo and Allergan agreed to settle with two Ohio counties on opioid charges this week, the state’s AG has a message: You’re not off the hook.