Biopharma M&A: increased activity expected for the second half of 2022

An Expert View from Steve Lendaris, partner at Baker Botts.

After a relatively quiet start to mergers and acquisitions (M&A) in the first half of 2022, the second half of the year is poised to see a significant uptick in M&A activity. A variety of factors appear to be converging as potential drivers of this increase, including: big pharma taking advantage of outsized cash holdings and depressed valuations to pick up commercial/late-stage assets; biopharma companies, large and small, pursuing early-stage assets to enter new markets; and privately-held companies taking advantage of unconventional avenues to acquire public listings, including mergers with special purpose acquisition companies (SPACs) or reverse mergers with public companies looking to expand their pipeline or eyeing an exit.

On the big pharma front, several high-profile deals relating to commercial/late-stage assets have already been announced. Pfizer (NYSE: PFE), for example, recently touted its $5.4 billion deal to acquire Global Blood Therapeutics, gaining access to its approved sickle cell disease therapeutic Oxbryta (voxelotor). Leadership teams at other big pharma companies are also expressing an openness to this type of deal-making. Bristol Myers Squibb (NYSE: BMY) chief executive Giovanni Caforio recently commented on his “size agnostic” approach to M&A and Merck & Co (NYSE: MRK) CEO Rob Davis reiterated during his second quarter 2022 earnings call that Merck has “the capital and the balance sheet strength to go after anything that we feel is strategically important.”