8/6/2023 0 Comments Real paintbrush pngPharma companies announced $70 billion worth of proposed deals in the first quarter. Yee predicts $200 billion worth of M&A will happen this year. Yee cites commentary from big pharma companies including Biogenīristol Myers Squibb and others. “We sense strength and confidence to transact, and our M&A thesis remains intact.” The patent cliff and IRA both help explain why big pharma and biotech CEOs “continue to emphasize more deals regardless of FTC headlines,” says Yee, at Jefferies. The law allows Medicare to negotiate prices on 10 medicines in 2026, and 60 by 2029. A Congressional Budget Office (CBO) report concludes the IRA will to save the federal government $164 billion over 10 years. law contains provisions that will cut prescription drug costs over time, by allowing Medicare to haggle over drug prices and link price hikes to inflation. The Inflation Reduction Act (IRA) impact: This U.S. To show the extent of the impact, consider that Humira recently generated over 40% of AbbVie’s revenue and Keytruda accounted for about 30% of Merck’s sales.ģ. Will lose exclusivity on its cancer therapy Revlimid and anti-stroke medication Eliquis and Regeneron PharmaceuticalsĬollectively, these losses will leave a revenue hole of more than $60 billion. Will lose exclusivity on its cancer therapy Keytruda Bristol Myers Squibb Will lose exclusivity on its autoimmune drug Humira Merck For example, over the next several years AbbVie Big pharma companies face big patent cliffs: Patent expirations will cost big pharma companies a lot of revenue they will need to replace. “We believe the FTC’s arguments are relatively weak and our base is that the deal will close,” concludes Jefferies biotech analyst Akash Tewari.Ģ. The legal experts say FTC complaint is more of a test case to expand M&A law to include the concept of bargaining leverage - and not necessarily a slam-dunk win based on traditional issues like product overlap. The key takeaway: The Jefferies legal experts offer 60%-80% odds that the FTC will fail. ![]() Jefferies, for example, has hosted calls with several legal experts, including a former FTC attorney with 38 years’ experience at the agency, sometimes on pharma issues. That said, brokerage calls with antitrust legal experts suggest the FTC complaint may be a stretch, and the odds are high that the FTC will lose. The FTC challenge may fail: It is always tough to predict court outcomes. I’ll also explain why the pressures on big pharma to buy biotech companies are so big, and more about the three names I single out.ġ. Let’s take a look at the odds of success based on analysis by Jefferies biotech analysts Michael Yee and Akash Tewari, and their legal experts. The FTC is concerned that Amgen will use these important therapies as leverage to sway pharmacy benefit managers to give Amgen favorable treatment over its competitors. Proposed acquisition of Horizon TherapeuticsĪmgen wants Horizon for therapies for thyroid eye disease and gout. ![]() These stocks are Alnylam PharmaceuticalsĪt issue here is an FTC lawsuit to block Amgen’s ![]() They also have other positive qualities in case the M&A speculation does not work out. I believe three stocks will then emerge as strong potential takeover targets again. The FTC cloud might be removed as soon as August or September, in court proceedings. Has traded down slightly so far this year compared to a 12% gain for the S&P 500 The iShares Biotechnology exchange traded fund Then it will be “game on” again for the mergers and acquisitions trade and biotech in general.īiotech has a lot of ground to make up.
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