Read our Pharma Market Update for our insights on the sector this quarter.

In our view, the pharma industry needs to ‘double-down’ on organic and inorganic innovation to navigate a challenging marketplace. There is a looming “patent cliff” with the top 20 biopharma companies collectively facing as much as $180 billion of potential revenue headwind over the next five years. Also, with the election of President Trump, we see an ongoing effort to put downward pressure on drug pricing, building on recent legislation such as the Inflation Reduction Act (IRA). In our view, any pressure on Medicare (and Medicaid) pricing could have a ‘ripple’ effect on commercial pricing.

Key Takeaways

• The year 2024 proved to be a quiet year for pharma industry mergers and acquisitions with only 39 deals (greater than $50 million in size), according to the Biopharma Dive database. And none of these deals were over $5 billion. This compares to 38 deals in 2023 (8 were over $5 billion) and 43 deals in 2022 (3 over $5 billion). In our view, this appears to reflect a broader trend of smaller biopharma firms marketing their own products – versus having to partner or sell-out to a larger sponsor.
• In January 2025, the JP Morgan Healthcare Conference featured several sizable pharma acquisitions. In our view, this could be an indicator of a much more active year for M&A activity in the pharma space. For example, J&J announced plans to acquire Intra-Cellular Therapies for $14.6B. This would be the largest biopharma acquisition since Pfizer purchased Seagen for $43B in early 2022. Also, at the JP Morgan Healthcare Conference, GSK announced plans to acquire IDRx, as part of a shift by GSK towards oncology (away from vaccines).
• Separately, the Trump administration appears relentlessly focused on rebuilding U.S. domestic pharma manufacturing using tariffs and trade policy. This has already resulted in a number of major pharma companies on-shoring their drug manufacturing with others indicating that they would be considering reshoring strategies in the near-term.

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

Read our Q3 2024 Pharma Market Update here.