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Pharmaceutical & life sciences: Deals 2022 outlook

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What's driving deals in 2022

PwC's Deals Sector Leader John Potter and other partners discuss the deals outlook for 2022.

Exceptional 2022 M&A activity expected

In 2022, we expect M&A investments to reach $350 billion to $400 billion, driven by all subsectors. The continuation of the $5 billion to $15 billion biotech deals, combined with medium-sized pharma ($50 billion) and medical device ($25 billion) deals is expected to drive significant investment dollars in M&A. The sector could also see a large deal ($100 billion or more) as part of a transact-to-transform strategy, given the continued need for scale. Tailwinds around the need to invest in growth and access to capital will likely more than offset the potential headwinds around drug pricing, the eminent tax rate increases and the recently active Federal Trade Commission (FTC) agenda, which could impact the ability to execute larger deals in the short term.

As predicted, pharmaceutical and life sciences (PLS) M&A rebounded in 2021 as large pharma acquisitions of biotechs continued, medical device activity increased after a pause driven by COVID-19 uncertainty and the cyclicality of the larger other/services subsector (representing three of the top 10 deals in 2021). Overall, the activity in 2021 represented a more normal year of M&A investing and some level of deferred M&A from 2020. We believe there remains a significant amount of capital allocation available for M&A, which will drive an exciting 2022.   

Pharmaceutical and life sciences deals outlook

2022 will likely see investments in high growth areas across all the subsectors. Pharma is expected to continue investing in oncology as well as cell and gene therapy, but also in other areas such as neurology and cardiology as developments there attract greater interest. Technologies such as mRNA have already begun to attract more attention. Larger companies will look to further diversify their portfolios given they have divested heavily via sale or spins and will now need to reinvest that capital in areas that provide some exposure to adjacent areas. We see medical device companies continuing to invest in areas where oversized growth will happen as exemplified by the $1.8 billion Boston Scientific and Baylis deal.

The presence and expansion of certain key drivers will prompt deal activity throughout the sector. Some of the most critical themes we expect for the PLS sector include the need to optimize portfolios, committing capital to achieve growth agendas, finding ways to unlock value in a high-multiple deal environment and safely navigate through regulatory uncertainty.

Companies are looking to move away from being broader conglomerates, and divestitures and spins will free up capital and allow them to achieve growth to become more focused and innovative. While capital continues to be readily accessible for most of the sector, the need for clearly defined and actionable value creation plans in an environment with seller’s high price expectations has made it more important than ever to drive shareholder returns.  The ever-changing regulatory landscape, the potential for US and global tax reform, and the continued focus on the affordability of drugs will remain issues that the sector will need to consider when executing deals in 2022 and beyond.

“We should see an exceptional level of activity across all sectors in 2022 as companies look to further their growth agenda. Biotech and smaller medical device deals should continue in the first half of the year, with the second half poised for larger deals driven by a need for scale and an expected settling of the regulatory landscape.”

— Glenn Hunzinger, US Pharmaceutical & Life Sciences Consulting Solutions Leader

Sub-sector outlook


We see continued biotech acquisitions in the $5 billion to $15 billion range throughout the year as companies continue to make bets to fill potential gaps in their 2024 to 2026 pipelines. On top of this there will likely be several larger-sized ($50 billion or more) deals where we believe companies will invest to diversify their businesses in adjacent therapeutic areas since they have recently divested non-pharma (e.g. OTC, Animal Health, etc.) subsectors. There is a possibility for one transact-to-transform deal given the continued need for scale around category leadership to be able to compete for the long term. We expect 2022 to see a reverse from the low period of pharma investing in 2021 (similar to the levels in 2020 and 2017).


Biotech companies have recently raised significant capital in the public markets, either through IPO, secondary offering or through leveraging alternative private financing (which is becoming a much more mature investor category). The desire for large pharma companies to seek biotech targets will likely lead to more biotech M&A relative to prior periods. The flurry of growth in potential biotech targets driven by the availability of capital over the past years will provide the right landscape for M&A. However, the difference between drug prices implied in biotech companies' market capitalization vs. the prices acquirers believe to be realistic is the biggest disconnect between buyers and sellers. This year has been the third year that biotech investing is over $100 billion and we see this trend continuing.

Medical device

As expected, 2021 represented a bounce back to M&A in the medical device industry with about $85 billion of deals, while 2020 levels were exceptionally low due to COVID-19 challenges. Nevertheless, we see more activity ahead in 2022 for the subsector, as the need for both scale — given reimbursement pressures (as exemplified by the $12.3 billion Baxter-Hill Rom deal)  — as well as the need to invest in high growth areas (as exemplified by the $1.8 billion Boston Scientific/Baylis deal). Given the fragmented nature of this subsector, the need for continued consolidation exists. Lastly, we see continued proactive portfolio management and the use of divestitures as a way to free up capital to reinvest in the high growth adjacencies, with private equity as likely suitors. 


In the other/services subsector, 2021 was one of the highest periods of deal value, driven by activity in the contract research organization (CRO) space. Pharma services (CRO, etc.) have seen cyclical M&A cycles over the years driven by the continued evolution of these companies either expanding through additional offerings (as exemplified by Thermo Fisher’s acquisition of PPD for $21.7 billion) or through scale (as exemplified by Icon’s $12.8 billion acquisition of PRA Health Sciences). While we see investment dollars declining in 2022 given the significant levels in 2021, we also see an expansion in this category which will fuel more significant M&A volume in the future. The establishment of stand-alone OTC companies (GSK-Pfizer’s joint venture to become public in the beginning of 2022, as well as Johnson & Johnson’s recent announcement to spin their consumer division) will provide companies with a more optimal capital allocation strategy relative to being owned as part of a larger multinational conglomerate.

Key deal drivers

Optimizing portfolios and divesting to reinvest

We continue to see pharma companies looking to move away from being broader conglomerates towards being focused, innovative biopharma-centric companies. Over the years, Pfizer, GlaxoSmithKline, Merck & Co. and others have divested or spun off large, non-core businesses. Recently, Johnson & Johnson announced it would spin off its consumer division and Novartis announced its strategic evaluation of its generics division. These transactions will free up capital and allow companies to achieve potential business investments in the future to meet their growth agendas. Divestitures will likely be a way to transform and simplify companies. We expect this heavily in the medical devices sector as well as pharma.

Committing capital to growth

With the prolific accumulation and access to capital in the current environment, companies will need to reinvest that capital in areas that drive shareholder returns. Access to capital for biotech companies continues to be an area that is changing the industry paradox, whereby new, predominantly private capital is competing against big pharma and the public markets. We anticipate this capital will be rapidly raised and deployed towards targeted R&D efforts needed to accelerate promising drug candidates through development. The pharma subsector continues to have a need to both fill their portfolio gaps (primarily in the 2024–2026 periods) while also adding scale to remain competitive in a demanding market.

Unlocking value in a high-multiple, high-expectations environment

We continued to see the need for companies to meet seller’s high price expectations to acquire companies. With the premiums for biotechs ranging from 60% to 70% at times as well as broader M&A being closer to 30% premium, the need for clearly defined and actionable value-capture plans becomes more important than ever. Successful companies will likely be those that have long-term plans for building blocks that allow for exponential value creation with every deal. The ability to deliver against that plan flawlessly will be rewarded, while those that do not will limit their ability to create value.

Navigating policy uncertainty in an election year

The PLS sector is facing significant potential challenges from the regulatory landscape. While tax reform will impact all US companies, the potential tax changes will have a significant impact on cash flows available for M&A in PLS, given its global footprint.  Additionally, given the focus of the FTC on M&A, pharma will likely be a focus area. Unless there is a relaxation in the regulatory environment, there is a risk that deals larger than $50 billion that we expect towards the second half of 2022 may not materialize. While the spotlight on drug pricing is here to stay, the public focus slowed a bit this year as pharma enhanced its brand by creating a vaccine to help the world through the pandemic. However, this will likely continue to be a significant focus and a headwind for the sector given the broader push for the affordability of drugs.

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Glenn Hunzinger

Partner, Pharmaceutical and Life Sciences Consulting Solutions Leader, PwC US

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