Pfizer's fortunes overshadow first-quarter dealmaking

It is worth noting that the figures above include deals that have yet to close. Heightened FTC scrutiny of pharma deals is causing antitrust clearance to take much longer than in the past – Pfizer has said the Seagen acquisition might not clear until early 2024, and Sanofi yesterday delayed close of its Provention buy to give more time for FTC scrutiny.

Last year’s biggest move, Amgen’s $28bn bid for Horizon, is also stuck in regulatory limbo, although the big biotech says it hopes that this will close in the first half. Few expect these deals to be turned down in totality, although disposals might have to be made, news on which will be a big focus.

Some believe that the newly onerous antitrust process is making buyers think carefully before making a move. This is possibly increasing the appeal of smaller deals, which are more easily cleared; the sector has been favouring so-called bolt-on deals for some time now, for various reasons including the perception that huge mega-mergers are valuing destroying. 

Apart from Seagen the first-quarter deals were small, with a huge valuation gap between that transaction and all others. Valuations are depressed, of course, and this lies at the root of another theme for 2023: the string of opportunistic moves that emerged.

Tough economic circumstances are forcing many developers to consider their options, and buyers are further flexing their muscles by insisting on contingent payments. Of the 10 first-quarter company takeouts with disclosed deal terms, eight employed either CVRs or downstream payments, dependent on predetermined future successes.

The equity markets remain tough, the IPO window is barely open and venture firms are keeping the purse strings tight. For sellers at the smaller ender of the sector these factors will make for difficult times at the negotiation table in the coming months.