We are optimistic that 2021 will be a return to normal for the pharmaceutical and life sciences (PLS) sector with around $250B-$275B in deal activity. Innovation and the need for scale will drive activity due to pandemic headwinds and the uncertainty of regulatory, tax and drug pricing policies.
As we had predicted, 2020 was a down year for deal making in the PLS sector compared to 2019 which included many transformational deals such as the acquisitions of Celgene and Allergan as well as the divestitures and spin-offs from large pharma companies. Compounding this was the impact of COVID-19 in 2020, which put a hold on many deals during the early stages of the pandemic and also significantly impacted the medical device sub-sector. These factors, among others, resulted in approximately $184B in deals for the sector, which was one of the lowest years in deal making in almost a decade.
PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021.
PwC's Deals Sector Leader John Potter discusses the trends driving deals and outlook for 2021. Explore national deals trends.
The return to a normal level of deal making will be driven by activity across all sub-sectors. Large pharma will continue to use M&A to achieve scale as companies look to invest for the long-term in key therapeutic categories such as oncology and cell and gene therapy. We see the potential for deal activity across all transaction sizes in 2021: several mega-merger and larger transactions ($50B+ size); many medium sized ($25B-$50B); and a flurry of the smaller bolt-on ($5B-$15B) transactions, similar to 2020.
“We are optimistic that 2021 will return to normal for deal making in PLS driven by the continued need for scale and innovation. Larger transformational pharma and medical device deals, combined with a flurry of biotech deals, will be the driver.”
US Pharmaceutical & Life Sciences Deals Leader, PwC US
Principal, Deals, PwC US