Drug approvals driving targeted acquisitions in US pharma, says Fitch

Large innovative US pharmaceutical companies are expected to continue targeted acquisitions as the need for larger transactions has declined, according to Fitch Ratings.

Consolidation continues as players search for scale, efficiencies and the next blockbuster drug, but an M&A shift toward smaller targets reflects increased drug approvals. Good access to funding at favorable rates has also aided M&A activity.

As pipelines improve, big pharma is seeking out individual therapeutics and smaller biotech companies to bolster drug portfolios. While patent expiries are not terribly onerous near term by historical standards, strengthening innovative drug portfolios is seemingly a preferable strategy as bigger M&A deals struggle to close.