Picky pharma prone to better proven partners amid dealmaking downturn

For “almost three years now” deal making has been a challenge across the life sciences industry, said Ed Saltman, senior strategic advisor at consultancy firm Lumanity, described to the audience at Bio Europe in Stockholm, Sweden.

He outlined three points he believes are the “biggies” to shape the conversation. Number one, “pharma needs to rely on biotech for innovation. We are not going to challenge that one, anyone who wants to challenge that one I would love to have that argument [because] you will not win.”

Number two concerned the “loss of exclusivity,” and number three detailed how “pharma greatly prefers late-stage assets over anything else.” To conclude his opening remarks, Saltman added that “all of these things have been given as fundamental to deal making since it began decades and decades ago.”

Tim Opler, managing director at investment bank and brokerage Stifel Institutional, said in a “very cyclical business […] there is nothing to be too alarmed by the decline in partnership activity.” Instead, Opler put forward the idea that “pharma is taking partnerships more seriously and there is less of the let’s try this out” approach.

Philippe Lopes Fernandes, executive vice president and chief business officer at Ipsen, agreed with Opler and advised delegates “we need to be careful with the perception of not having a lot of deals.” He said, “some deals are less in the spotlight” and explained how his firm has added multiple programs this year to replenish its pipeline in “a very substantial way.”

More options, more problems

Smaller deals and a different approach to partnering led into a discussion about whether the abundance of choice is slowing down dealmaking activity.

It is not very often a deal is struck in the life sciences space and the deciding company has only one interested party. 

When a company is looking to strike a deal in the life sciences space, there are plenty of potential players to do this with. Opler stated how “the bar for science right now is just going up” and it is not that people are unsure what to do, but more so “they are really picky.”

The opportunity to be “picky” signals the abundance of potential partners available in the space. Lubor Gaal, chief financial officer, at Circio Holding ASA described the dealmaking landscape as a “kid in a candy store, [there] is so much to choose from, it is hard to know what you want.” Consequently, deal making can take longer and seem sparser as companies search at length to find the best fit.

With clear challenges being outlined, Saltman questioned the panelists on when the sun is likely go come out in the deal making space. In a cyclical business environment, Gaal said the ups and downs of the industry are “part of the game and a natural part of business.”

He described how the dealmaking space in the pandemic was like “being in Ibiza, Spain and partying every day” but added “now we are in a new reality.” While that reality might “not be as bright as the pandemic […] the sun is already here.”