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Obesity, oncology and old age: How 2023 pharmaceutical M&A is reshaping the health-care industry

Pharmaceutical and health-care M&A accelerated throughout 2023, reshaping the drug and medical industries.
Health-care M&A in 2023 portends more breakthroughs in obesity, oncology and old-age treatments.
Michael McTague, Ph.D., is executive vice president at private equity firm Able Global Partners in New York.
Michael McTague, Ph.D., is executive vice president at private equity firm Able Global Partners in New York.

Mergers and acquisitions in the pharmaceutical and medical industries in 2023 show how the health-care landscape around the world is evolving and how those trends might continue playing out in 2024.

Here’s a brief look at this year’s developments.

In the global pharmaceutical industry, there were 376 merger and acquisition deals announced in Q3 2023 alone, totaling $33 billion, according to GlobalData’s Deals Database. In the U.S. pharmaceutical industry, there were 174 M&As announced in the third quarter, coming in at nearly $17 billion.

Biogen’s BIIB $7.3 billion acquisition of Reata Pharmaceuticals was the industry’s largest of the period. Reata is known for its work in neurology and genetic diseases. Other top acquisitions from the early part of the year include:

  • Acquired: Seagen. Acquirer: Pfizer PFE . Price: $4.3 billion. Date: March 2023
  • Acquired: Biohaven Pharmaceutical Holding. Acquirer: Pfizer. Price: $1.2 billion, Date: May 2022
  • Acquired: Prometheus Biosciences. Acquirer: Merck MRK . Price: $1.1 billion. Date: April 2023
  • Acquired: Oak Street Health. Acquirer: CVS Health CVS . Price: $1.1 billion. Date: February 2023

Starting slowly, activity picked up aggressively as 2023 passed the half way mark. According to pharmacompass.com, the oncology area alone witnessed 28 deals, worth a total of $45 billion, followed by immunology with seven deals at approximately $14 billion. In addition, Pfizer, Sanofi SNY , Novartis NVS and Novo Nordisk NVO acted as if the treadmill were running backwards, doling out funds for attractive companies and products.

Eli Lilly LLY just finished its acquisition of privately held Versanis Bio for $1.9 billion, which advances Lilly’s strategic move to gain prominence in the obesity and diabetes space. Lilly recently completed its submission to the FDA for approval of tirzepatide to treat obesity. Near year end, Roche RHHBY announced a merger agreement with privately held Carmot Therapeutics. Carmot oversees clinical-stage obesity drugs. The price will be $2.7 billion.

Drugs, supplements and old age

The Food and Drug Administration had a busy year with more than 30 approvals in the first half of the year alone. The final number will top 2022. Among the most notable are Paxlovid, a treatment for COVID-19. The basic safety of the medication is now confirmed. Another star is approval of Leqembi, which treats Alzheimer’s disease. Its aim is to gain a boost to memory and critical thinking.

The area of memory enhancement has certainly caught on with a number of popular, over-the-counter products going through a period of heavy advertising. Note that these “supplements” do not undergo truly rigorous review by the FDA. According to smarterhealthreviews.com, the leaders in this area include Noobru Nootropics Supplement and Native Mind Adaptogen Drink Mix. While the product names sound like the output of an aging hippie commune, users give them good ratings.

Amazon’s AMZN foray into health care has certainly worried the massive array of drugstore chains. As 2023 wound down, the online behemoth was noodling around with a plan to charge Prime customers $99 a year for annual access to One Medical, its recently acquired primary-care service. No doubt, this will move Amazon along in this highly competitive industry.

It’s an interesting strategy: There are an estimated 200 million Amazon Prime customers. If 15% of this group shifted to Amazon for primary-care, it would start a landslide in Amazon’s favor. Prime is easily accessible and offers many other benefits. Compare this to waiting in line at CVS or Walgreen’s.

Breakthroughs for a healthier world

Life expectancy, our December topic, shifted upward through the year. By the end of 2023, according to Microtrends, life expectancy for the entire world stood at 73.16 years, a slight increase from 2022. Certainly, two factors helped bring this about. One is the relatively limited amount of war in today’s world. Second is the general advance of medical care, especially in Africa where life expectancy is shifting upward. It should also be noted that wealthier countries tend to produce better overall results.

Investors will note that a number of business-related initiatives are yielding improved health everywhere. These include breakthroughs and advances in:

  • Moving mRNA technology ahead
  • More people benefiting from telehealth, including WebMD, owned by Kohlberg Kravis Roberts KKR
  • New pharmaceutical products
  • Improving health care in Africa