Weight-Loss, Alzheimer Drugs Drive M&A Market in Life Sciences

Two years of instability within the mergers and acquisitions market has led to some beneficial lessons for the pharmaceutical industry. More companies are focused on spurring organic innovation with a focus on strategic partnerships with companies that will build lasting relationships over typical acquisitions.

Despite the decrease in deal values in the past year, many in the life sciences industry are projecting a turnaround in growth. There are various areas garnering excitement within the industry, particularly as other market participants fight for a share of the booming glucagon-like peptide 1 (GLP-1) industry and promising developments for Alzheimer’s disease treatments.

First, investors are looking to pursue a second generation of GLP-1 medicines to supplant Zepbound and Wegovy. The anti-obesity market is expected to grow to $100 billion by 2030, with most market gains split between Eli Lilly and Company (the manufacturer of Zepbound) and Novo Nordisk (the manufacturer of Wegovy).

Dozens of pharmaceutical companies globally are hoping to cash in on this fast-growing market where increasing demand has led to persistent shortages and sky-high prices. Investors surely will see innovation in this area as a promising driver of growth, and smaller pharmaceutical companies likely will develop rivals to Zepbound, Wegovy, and other medications that will make obesity and diabetes treatment more accessible and affordable.

Second, developments in Alzheimer’s treatments provide a promising outlook. Nearly 7 million Americans live with the disease, and that figure is expected to increase to 13 million by 2050, making it an area ripe for innovation and investment.

Eli Lilly received US Food and Drug Administration approval for Kisunla on the heels of the FDA’s acceptance of a supplemental biologics license application for Biogen and Eisai’s LEQEMBI. These two drugs target amyloid beta, a toxic protein that accumulates in the brain, causing the cognitive issues associated with Alzheimer’s.

AbbVie also acquired Aliada Therapeutics, a biotechnology company specializing in central nervous system diseases, while Takeda Pharmaceuticals entered into a licensing agreement with AC Immune for an option on the global rights to an active immunotherapy that targets amyloid beta. These recent movements in Alzheimer’s treatments demonstrate continued strategic interest in building the Alzheimer’s therapeutic pipeline.

Given the enormous impact of obesity and Alzheimer’s diseases worldwide, innovation in these areas will be important drivers of the life sciences industry.

Political Considerations

Changes by the Trump administration, however, bring uncertainty to the life sciences sector. New Hart-Scott-Rodino Act requirements now in effect will make the premerger filing process more burdensome and time-consuming. These rules require the evaluation of transaction rationale and competitive overlap, and may cause some M&A players to hesitate on certain transactions or decide not to move forward at all.

Persistent high interest rates are causing investors to take a wait-and-see approach when it comes to the impact of President Donald Trump’s economic policies.

Finally, the BIOSECURE Act could be signed into law this year. This legislation seeks to prevent entities receiving federal funding from doing business with foreign biotechnology companies affiliated with the People’s Liberation Army and five Chinese biotechnology companies.

In practice, the BIOSECURE Act would prohibit federal agencies from procuring, purchasing, or obtaining biotechnology equipment or services from a biotechnology company that is controlled or operated on behalf of a foreign adversary. Political drivers could upend expectations despite the current optimism in the life sciences market.

Those in life sciences may pivot to diversifying investments across a mix of M&A transactions and licensing agreements to decrease the risk of traditional transactions. A mix of new techniques and increased confidence will make for an intriguing road ahead.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Byron S. Kalogerou is founder of McDermott Will & Emery’s life science industry group and senior partner in the Boston corporate practice.

Meredith Cullen Schwartz is an associate in McDermott Will & Emery in Boston focused on corporate advisory and transactional matters.

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