Sector Report

Amidst a temperate and relaxing summer of cancelled flights and interest rate hikes, we would like to share with you our 1H 2023 Pharmaceutical Sector Update with all our takeaways on noteworthy pharma M&A, news, and industry developments. 

• Declining PE deal value coincided with relatively stable (during the last four quarters) PE deal volumes. This indicates smaller transactions and lower valuations. However, the pause on the part of sellers has resulted in a scarcity of good assets, leading to fierce buyer competition for quality assets, keeping select valuations high and prolonging a reset.
• Corporate Divestures continue to provide opportunities for specialty pharma and PE backed platforms to be acquisitive.  
• Big pharma cash balances (estimated as much as $700B) and impending patent cliffs (where $390B in annual sales is at risk to generic entry through 2030) are expected to drive transformative M&A; however, FTC regulatory concerns have led to a disciplined approach, and IRA implications are reshaping deal making.
• The generic market landscape appears primed for a major upcycle, with the impending patent cliffs opening up over $118B in opportunity for generics by 2026. These new opportunities should hopefully relieve some of the pricing erosion currently facing the industry and strategic entries should give manufacturers some security as governments push buyers to prioritize reliability over pure price to fend off rising drug shortages.

We hope you find this information valuable. If you’d like to discuss further, please reach out to our Research team.