Charting Pharma’s Future: How Mergers and Acquisitions Are Reshaping the Industry Landscape

Mergers and acquisitions (M&As) are a critical strategy for value creation in the pharmaceutical industry, enabling companies to adapt to market shifts, expand their product portfolios, and achieve operational efficiencies. In Q3 2024 (GlobalData’s Deals Database), the pharmaceutical sector saw 420 M&A deals valued at $32.4 billion, underscoring the ongoing importance of these transactions in shaping the future of the industry.

Pharmaceutical companies pursue M&As for three key reasons: to drive innovation, achieve economies of scale, and realign their product portfolios. Innovation is essential in an industry where success depends on small compounds and sophisticated processes. Acquiring smaller, innovative firms allows larger companies to access new technologies and expertise, keeping them competitive. Additionally, due to the high costs of drug development and manufacturing, M&As help companies realize significant operational and financial efficiencies.

Another important driver is portfolio realignment. As pharmaceutical companies face patent expirations and shifting market demands, they must continuously adjust their portfolios to stay relevant. This may involve divesting noncore assets and acquiring new products or entering adjacent therapeutic areas. The growing focus on oncology, central nervous system (CNS) disorders, and cardiometabolic diseases, including obesity, highlights this ongoing trend.

A programmatic approach to M&A—where companies make smaller, strategic acquisitions over time—has proven particularly effective in the pharmaceutical industry. This approach allows firms to address specific gaps in their portfolios and leverage their global reach to unlock new markets for promising products from smaller biotech companies, resulting in more sustainable, value-driven growth.

Major Mergers and Acquisitions in the Biopharma Sector in 2024: An Overview of Strategic Deals

The biopharma sector in 2024 has witnessed a notable volume of M&A, though no truly massive transactions have occurred. However, several key deals have made a significant impact on the industry, highlighting shifting strategies, technological advancements, and an increasing emphasis on specialized treatments in areas like autoimmune diseases, oncology, and neuroscience.

Novo Holdings' $16.5 Billion Acquisition of Catalent

The largest acquisition of the year so far is Novo Holdings' $16.5 billion deal to acquire Catalent, a contract development and manufacturing organization (CDMO). This acquisition is particularly strategic for Novo Nordisk, whose products—especially Ozempic and Wegovy—are driving its success in the global diabetes and obesity markets. The deal will strengthen Novo’s manufacturing infrastructure, adding key fill-finish sites in Europe and the U.S. that are critical to scaling up production for these high-demand drugs. Catalent’s capabilities are seen as pivotal in ensuring the continued growth of Novo’s biologics and injectable therapies, which are central to the company's strategy.

Bristol-Myers Squibb’s $14 Billion Acquisition of Karuna Therapeutics

Bristol-Myers Squibb (BMS) made headlines with its $14 billion acquisition of Karuna Therapeutics, a Boston-based company specializing in advanced treatments for psychiatric and neurological disorders. This deal centers around Karuna's lead drug candidate, KarXT, which is currently under FDA review for the treatment of schizophrenia. However, BMS’s strategic interest lies not only in KarXT’s potential in schizophrenia but also in the broader pipeline of therapies for neurological conditions like Alzheimer’s disease and bipolar disorder. This acquisition solidifies BMS’s position in the neuroscience space, which has long been a focus of its R&D efforts.

Merck’s $10.8 Billion Acquisition of Prometheus Biosciences

Merck & Co. continued to make waves in the biopharma sector with its $10.8 billion acquisition of Prometheus Biosciences, a leader in precision medicine for immune-mediated diseases. Prometheus’s expertise in gastrointestinal (GI) disorders, particularly autoimmune diseases like ulcerative colitis and Crohn’s disease, will complement Merck’s existing portfolio. Prometheus’s lead drug candidate, PRA023, is currently in clinical trials, and its potential to address chronic immune conditions is highly promising. Moreover, the acquisition includes the company’s Prometheus360 platform, which utilizes artificial intelligence and machine learning to identify new therapeutic targets, making it an important addition to Merck’s capabilities in precision medicine.

AbbVie’s Strategic Acquisitions in Oncology and Neuroscience

AbbVie, a major player in biopharmaceuticals, made two significant acquisitions this year. The first was a $10.1 billion purchase of ImmunoGen, a leader in antibody-drug conjugates (ADCs). ImmunoGen’s ADC technology, including the FDA-approved Elahere for treating platinum-resistant ovarian cancer, will enhance AbbVie’s oncology portfolio. The second deal, valued at $8.7 billion, was AbbVie’s acquisition of Cerevel Therapeutics, a company focused on developing treatments for psychiatric and neurological disorders. Cerevel’s innovative therapies, such as those aimed at treating schizophrenia and Parkinson’s disease, complement AbbVie’s existing neuroscience pipeline and mark a strategic move to expand its presence in this high-demand sector.

Bristol-Myers Squibb’s $5.8 Billion Acquisition of Mirati Therapeutics

BMS also made a significant move in oncology with the $5.8 billion acquisition of Mirati Therapeutics. Mirati’s strength lies in its innovative approach to targeted cancer therapies, particularly in the field of precision oncology. The acquisition strengthens BMS’s oncology portfolio by adding Krazati, an FDA-approved treatment for lung cancer, and bolstering its pipeline of promising cancer therapies in clinical development. The deal aligns with BMS’s broader strategy to lead in the oncology field, focusing on cancer therapies that target specific genetic mutations.

-  Vertex Pharmaceuticals’ $4.96 Billion Acquisition of Alpine Immune Sciences

Vertex Pharmaceuticals, traditionally known for its pioneering cystic fibrosis treatments, is expanding its focus with the $4.96 billion acquisition of Alpine Immune Sciences. This acquisition diversifies Vertex’s portfolio into the autoimmune and inflammatory disease sectors. Alpine’s lead drug, povetacicept, is currently in Phase II trials for IgA nephropathy, a rare and progressive kidney disease. With this acquisition, Vertex enters direct competition with major players like Novartis, which is also advancing therapies targeting IgA nephropathy. This move signifies Vertex’s strategic expansion into new therapeutic areas.

Gilead Sciences’ $4.4 Billion Acquisition of CymaBay Therapeutics

Gilead Sciences, already a leader in virology and oncology, has broadened its reach into autoimmune diseases with the $4.4 billion acquisition of CymaBay Therapeutics. CymaBay’s lead candidate, seladelpar, is an oral treatment for primary biliary cholangitis (PBC), a rare liver disease. The acquisition not only strengthens Gilead’s autoimmune portfolio but also enhances its position in rare disease treatments. Seladelpar was granted accelerated approval by the FDA, making it a key asset for Gilead in the growing autoimmune space.

Merck’s $3 Billion Acquisition of Eyebiotech

Merck made another important acquisition in the eye disease sector with its $3 billion purchase of Eyebiotech. Eyebiotech focuses on the development of therapies for retinal diseases, including diabetic macular edema (DME), which is a leading cause of vision loss in diabetes patients. The acquisition includes late-stage clinical assets, such as Restoret, a promising treatment for DME currently entering Phase IIb/III trials. This acquisition further strengthens Merck’s presence in the ophthalmology space, adding innovative treatments to its portfolio.

Roche’s $3.1 Billion Acquisition of Carmot Therapeutics

Roche, a company known for its cancer treatments and diagnostics, made a strategic move with the $3.1 billion acquisition of Carmot Therapeutics. Carmot is a biotech company that develops novel therapies for diabetes and obesity. The acquisition adds promising candidates to Roche’s pipeline, focusing on metabolic diseases and weight management. Carmot’s platform also targets blood glucose regulation, making it an important strategic addition to Roche’s growing metabolic and diabetes portfolio.

Other Notable Deals

The year has also seen several other noteworthy acquisitions:

Novartis completed a $2.9 billion acquisition of MorphoSys, a company focused on antibody-based treatments for cancer. This deal strengthens Novartis’s leadership in oncology with the addition of MorphoSys's promising pipeline.

AstraZeneca acquired Fusion Pharmaceuticals for $2.4 billion, bolstering its radiopharmaceuticals portfolio aimed at treating cancer with targeted radiation therapies.

Pharma's Path Forward

The M&A activity in 2024 reflects broader industry trends, including the growing emphasis on precision medicine and targeted therapies. Acquisitions such as Merck’s purchase of Prometheus Biosciences and AbbVie’s acquisition of ImmunoGen highlight the industry’s shift toward precision approaches that harness cutting-edge technologies to identify new therapeutic targets and accelerate the development of personalized treatments.

Companies are looking to strengthen their portfolios by acquiring innovative treatments that address unmet medical needs, as well as expanding into therapeutic areas with strong growth potential.

Overall, while 2024 may not have seen any groundbreaking mega-deals, the biopharma sector remains active with strategic M&A activity aimed at expanding capabilities, acquiring cutting-edge technology, and reinforcing market leadership in high-demand therapeutic areas.

References

1.IQVIA. Biopharma M&A outlook for 2024. IQVIA. Published January 2024. Accessed December 14, 2024. https://www.iqvia.com/blogs/2024/01/biopharma-m-and-a-outlook-for-2024

2.BioSpace. Pharma has kept M&A spending small this year, with just one deal topping $5B. BioSpace. Published December 11, 2024. Accessed December 14, 2024. https://www.biospace.com/business/pharma-has-kept-m-a-spending-small-this-year-with-just-one-deal-topping-5b

3.DCAT. BioPharma's top 10 mergers & acquisitions thus far in 2024. DCAT Value Chain Insights. Published August 01, 2024. Accessed December 14, 2024. https://www.dcatvci.org/features/bio-pharmas-top-10-top-mergers-acquisitions-thus-far-in-2024/

4.Pharmaceutical Technology. Global M&A activity in the pharmaceutical industry. Pharmaceutical Technology. Published December 02, 2024. Accessed December 14, 2024. https://www.pharmaceutical-technology.com/data-insights/global-ma-activity-pharmaceutical-industry/

5.McKinsey & Company. Life sciences M&A shows new signs of life. McKinsey & Company. Published February 29, 2024. Accessed December 14, 2024. https://www.mckinsey.com/capabilities/m-and-a/our-insights/life-sciences-m-and-a-shows-new-signs-of-life

6.McKinsey & Company. A new prescription for M&A in pharma. McKinsey & Company. Published September 10, 2020. Accessed December 14, 2024. https://www.mckinsey.com/capabilities/m-and-a/our-insights/a-new-prescription-for-m-and-a-in-pharma

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About the Author

Neeta Ratanghayra

Freelance Medical Writer

Neeta Ratanghayra is a freelance medical writer, who creates quality medical content for Pharma and healthcare industries. A Master’s degree in Pharmacy and a strong passion for writing made her venture into the world of medical writing. She believes that effective content forms the media through which innovations and developments in pharma/healthcare can be communicated to the world.