For Immediate Release
Industry: Pharma, Part 2
The pharma and biotech stocks kicked off 2018 on a strong note, carrying on the momentum gained last year. Though the sector has been struggling lately, probably on broader market pressure, it is expected to rebound as the year progresses.
Innovation, mergers and acquisitions (M&As), strong results, product approvals and positive data flow should act as catalysts for pharma and biotech stocks.
M&As to Accelerate
Last year was not particularly great as far as M&A deals were concerned. Industry bellwether Johnson & Johnson acquired Actelion for approximately $30 billion, while Gilead acquired Kite for $11.9 billion.
However, this year, expectations of an increase in M&A activity are high. The new tax law, which cuts the corporate tax rate from 35% to 21% and encourages companies to bring back cash held overseas at a one-time tax rate of 10%, is expected to spur merger activity. Sanofi and Celgene have already announced two deals each so far this year.
Sanofi announced deals to buy Belgian biotech company Ablynx and hemophilia-focused biotech Bioverativ. Celgene announced deals to buy Juno Therapeutics, Inc., which focuses on the development of CAR-T therapies, and Impact Biomedicines, which will add a late-stage JAK2 kinase inhibitor, to Celgene's pipeline.
Merck recently announced that it has proposed to buy Australian oncolytic immunotherapies maker Viralytics Ltd. to strengthen its presence in the fast-growing immuno-oncology market.
While some of these companies are looking to replace sales of blockbuster products that are facing loss of patent exclusivity, others are looking to build their pipelines both through acquisitions as well as licensing agreements.
Companies with innovative technologies and pipelines are highly sought after. Niche disease areas like nonalcoholic steatohepatitis (NASH), immuno-oncology and multiple sclerosis are in demand. Treatments for orphan diseases are also much sought after, with quite a few deals being signed in these areas.
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