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Good morning from San Francisco! I'm here representing CNBC at the annual JPMorgan Health Care Conference – the nation's largest gathering of biotech and pharma execs, investors and analysts.
As the industry ends a year marked by multiple historic firsts, attendees are eager for updates on weight loss drugs, new cancer treatments and Medicare drug price negotiations, among other topics. But as the conference opened Monday, mergers and acquisitions dominated the discussion.
Here's a recap of what happened on the first day:
- Johnson & Johnson said it will pay $2 billion for Ambrx Biopharma, a drugmaker specializing in one of the hottest areas of cancer treatment.
- Merck said it will pay $680 million to buy cancer drug developer Harpoon Therapeutics to expand its oncology portfolio with immunotherapies.
- Medical device maker Boston Scientific Corp said it will pay $3.7 billion to acquire Axonics Inc, gaining access to devices used to improve bladder function.
There may be more dealmaking to come: Swiss drugmaker Novartis is nearing an acquisition of biotech company Cytokinetics and its promising heart drug, the Wall Street Journal reported Monday, citing sources familiar with the matter.
Those deals follow a frenzy of M&A activity in the biotech and pharmaceutical industry during the last few days of 2023 and the beginning of 2024.
It also follows a broader rebound in dealmaking last year.
The industry's M&A spending hit $191 billion as of Dec. 10, a 34% jump from the total in 2022, according to EY's annual Firepower report, which assesses pharmaceutical companies' ability to execute M&A deals based on their balance sheets.
That increase reflects more M&A activity among larger pharmaceutical companies, as those drugmakers accounted for nearly 70% of the total M&A investment, compared to only 38% in 2022. More activity among large drugmakers significantly increased the industry's average acquisition size in 2023, the EY report said.
So, what does that mean for 2024? EY expects the industry's rising M&A activity to continue and even "accelerate" Arda Ural, the firm's Americas industry markets leader in health sciences and wellness, told CNBC.
Those companies are feeling more urgency to make deals because they are grappling with revenue challenges such as upcoming losses of exclusivity of several blockbuster drugs, an uptick in late-stage trial failures and the Inflation Reduction Act, which is allowing Medicare to negotiate down prices on certain costly drugs, according to Ural.
Another major component is that the biotech and pharmaceutical industry is starting the year off with about $1.4 trillion on hand to make deals, he added.
"If you combine everything, I think we say confidently that there's a cautious optimism in 2024 for dealmaking," he told CNBC in an interview.
We're already seeing more deals roll in on the second day of the conference: GSK said on Tuesday that it struck an up to $1.4 billion agreement to acquire the biotech company Aiolos Bio, which makes respiratory medicines, as the British pharmaceutical giant seeks to broaden its range of asthma products.
Feel free to send any tips, suggestions, story ideas and data to me at annikakim.constantino@gmail.com.
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