Pharma continues to emphasize maximizing value and managing risk in deal making. Despite the overall decrease in deal volume, 2024 saw the highest recorded deal values for the second year in a row, indicating a strategic shift towards fewer, but higher-stakes transactions. This environment was shaped by looming patent expirations threatening substantial revenue, the ongoing need to replenish pipelines with innovative assets and an evolving regulatory environment that both facilitates and restricts dealmaking. Key factors driving a measured resurgence in selective, strategic transactions include a focus on pre-commercial assets, platform technologies and high-impact therapeutic areas.
Investing in early-stage programs and platform-based discovery
Partnerships filling pipeline gaps, complementing existing portfolio assets and enabling differentiation from the competition remained the focus of 2024 deal making. And pharma wasn’t afraid to invest in the right targets: 79 deals exceeded $1 billion and contributed $150.1 billion, or 65%, of the total deal value for the year.
Notable transactions included Sarepta Therapeutics’ $12.82 billion licensing agreement with Arrowhead Pharmaceuticals for preclinical and discovery-stage programs for rare, genetic musculoskeletal, CNS and respiratory diseases. These programs are based on Arrowhead Pharmaceuticals Inc’s proprietary Targeted RNAi Molecule (TRiM™) platform for subcutaneous delivery of siRNA therapies, and the companies will also collaborate to discover up to six additional muscle, cardiac or CNS targets.
Novartis had four of the top ten deal values in 2024, contributing to the company’s $21.31 billion total in disclosed amounts for 14 of its 30 deals. These deals include a phase 1 program and discovery of cardiovascular targets using Shanghai Argo Biopharmaceutical Co Ltd’s RNAi technology, discovery and development of bispecific antibodies against cancer using Dren Bio Inc’s proprietary Targeted Myeloid Engager and Phagocytosis Platform, a Huntington’s disease program from PTC Therapeutics Inc and more. In addition, Novartis spent up to $6.18 billion on six acquisitions, two with undisclosed values. Its largest, via its subsidiary Novartis BidCo AG, was a voluntary public takeover bid for MorphoSys AG for up to $2.91bn. Novartis also acquired Mariana Oncology and its radiopharmaceutical assets for up to $1.75bn. Both of these focus on oncology assets.
Although Merck led total deal values in 2022 and 2023, it dropped to third place in 2024, spending up to $12.03 in disclosed amounts for eight of its 30 deals. The most expensive was its commitment of up to $2.7 billion to in-license LaNova Medicines Ltd’s PD-1/VEGF bispecific antibody LM-299, with which it aims to off-set the loss of KEYTRUDA revenue when it loses patent protection in 2028. With uptake in earlier-stage indications such as triple-negative breast cancer, non-small-cell lung cancer (NSCLC) and renal cell carcinoma, KEYTRUDA accounted for nearly half of Merck’s sales at the end of 2024. LM-299 could be a valuable new immunotherapy option across multiple solid tumor types, especially for advanced tumors in patients resistant to PD-1 treatments.
Targeted protein degraders on the rise
The pursuit of “undruggable” targets continues to drive innovation in the biopharmaceutical industry, with targeted protein degraders (TPDs), such as proteolysis-targeting chimeras (PROTACs) and molecular glue degraders, taking center stage. In 2024, this momentum translated into a significant surge in deal-making activity. Nearly 20 deals, totaling approximately $13.25n, were announced, encompassing research collaborations, early-stage licensing agreements and M&As. The collaborative nature of many of these transactions underscores the relatively early stage of development for this modality and the strong interest from larger pharmaceutical companies to secure a leading position in this rapidly evolving field.
Monte Rosa Therapeutics, a Boston-based biotech, featured prominently, securing top-five spots in both 2023 and 2024. A $2.25 billion development and commercialization licensing agreement for multiple targets with Novartis in 2024 followed a similar $2.05 billion collaboration and licensing agreement for neurology and oncology targets with Roche in late 2023. Both deals focused on molecular glue degraders discovered using Monte Rosa’s proprietary Quantitative and Engineered Elimination of Neosubstrates (QuEEN™) discovery engine.
Pfizer also actively participated in the TPD landscape, entering an agreement potentially worth $1.55 billion with TRIANA Biomedicines Inc. This collaboration focuses on the discovery of novel molecular glue degraders for multiple targets across various disease areas leveraging TRIANA Biomedicine Inc’s proprietary molecular glue discovery platform. Pfizer Ventures also participated in TRIANA Biomedicines Inc’s $110 million Series A funding in 2022.
Other targeted protein degrader deals in 2024 centered around autoimmune, inflammatory and cardiometabolic targets as well as rare diseases. With a growing number of TPD assets entering phase 1, 1/2 or 2 clinical trials, the momentum in this space is expected to continue, paving the way for future partnerships.
Partnering crucial to sustain innovation
Regulatory and political developments are having a dual impact on the industry. The U.S. administration’s deregulatory approach and a potentially less aggressive stance from the Federal Trade Commission are reducing antitrust concerns for larger transactions. However, uncertainty regarding funding and personnel cuts to the U.S. FDA and NIH, ongoing drug pricing reforms and geopolitical tensions present risks to supply chains and international collaborations. Additionally, the sector is facing global consequences due to a decline in U.S. government funding for academic research, which may reshape future licensing opportunities and the availability of scientific talent.
Although pharmas will continue to rely on biotechs to fill gaps in expertise, technology and resources, the landscape is currently characterized by caution. Biotechs looking to partner to further their assets will benefit from demonstrating that they can meet pharma companies’ priorities. The sector’s ability to navigate regulatory uncertainties and the evolving funding landscape will be critical in shaping the next wave of innovation and growth.
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