‘Record-breaking’ 2015 will see surge in pharma acquisitions

Last year’s upsurge in financing to private pharma and firms with market capitalisation under $1bn has maintained momentum throughout Q1 2015 and will carry on, Patel told us. Meanwhile, partnering deals and M&As with large cap pharma companies continue to decrease since the last mega-merger peak in 2009.

CNS: a rising star​

Patel’s company surveyed pharma companies’ intentions for deals in the coming year. While oncology retains the most popular spot, demand from buyers for CNS (central nervous system) drug candidates (excluding pain) is rocketing, as is cardiovascular.

But demand and supply for these therapeutic areas differs, creating a seller’s market, said Patel.

Interest from buyers in CNS acquisitions (15% of those surveyed, or 23% including pain) outstrips the assets available from sellers (10% had CNS assets to sell, or 13% including pain), according to the survey.

The disparity in CNS assets is driven by recent and imminent patent expirations, Patel told us.

“Buyers are needing to fill their pipeline. They have an infrastructure in the CNS space, and they need to ‘feed the beast’.​

It is these logistical issues, rather than scientific breakthroughs, which are mostly behind the CNS rise, although “there are several flourishing hypotheses in Alzheimer’s that are being batted around.​”

He added that CNS buyers are likely to purchase multiple drug candidates to spread the risk, which is higher than for oncology assets.

“[For CNS,] outside pain in particular –the risk of the asset is still significant in Phase III. ​

“It’s not until the product is on the market that it’s de-risked. Placebo effects in those indications make it hard to translate sometimes to Phase II and III. ​

“In order to play in that market, buyers need to have multiple bets, because a significant number of those assets are not going to make it.​”

A seller’s market​

Overall, Patel predicted the next year will be a seller’s market, with pharma buyers almost three times as interested in buying Phase III assets of all types than sellers are in parting with their products. (Respective interest is at 36% and 13%.)

Preclinical and Phase I resources, however, are subject to slightly less demand than sellers are offering. Opthamology and non-vaccine antivirals are another area where sellers have a small surplus of assets.

In further trends, Patel told us cancer vaccines are eclipsing orphan drugs among desired deals – “the first time we’ve seen that in recent years,​” along with ultra-rare and immuno-oncology products as hot areas for partnerships.