Recent Healthcare Trends & Transactions

Week of October 15, 2024 | Vol. 13, Issue 42

Global Healthcare Transaction Activity

Source: Data aggregated from S&P Global Intelligence. Click above for more details.

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Pharma and biotech companies continue to downsize their workforces. Layoff rounds have increased from 27 in 3Q22 to 46 in 3Q23 to 49 in 4Q23, according to the Fierce Biotech Layoff Tracker. Altogether, there have been 146 layoff rounds so far in 2024, which puts 2024 on pace with last year (187 in 2023). Layoffs seem to be broad-based across small/mid-sized biopharma and large pharma, in our view. A few notable exceptions were Novo Nordisk and Eli Lilly, two companies flush with cash due to their growth in the GLP-1/obesity space. Workforce cutbacks have accelerated since the “easy” capital markets in 2021. Since then, biopharma companies have had to rely on creative financing alternatives, and, of course, cost reductions to fund their day-to-day operations. Read More

Pharma and Biotech Workforce Reductions Continue to Increase Through 2024

Source: Fierce Biotech Layoff Tracker

Demand for behavioral health appears to be surging post-COVID. Behavioral health visit volumes increased 40% from 2019 to 2023, well outpacing other areas of healthcare, according to the Trilliant Health “2024 Trends Shaping the Health Economy.” For instance, primary care utilization is down 12% over this same period of time. Notably behavioral health patient visit volumes seem to be accelerating as well -- up 13% in 2023 (vs up only 5% in 2022) and most (~72%) of behavioral health visits are now done via telehealth. Also, notably, all behavioral health-related conditions seem to be seeing increases in treatment utilization with particularly strong demand for treatments for eating disorders and schizophrenia. Finally, the Trilliant report showed that many Americans still do not seek behavioral health treatments due to relatively poor coverage -- e.g., 14% of patients reported receiving behavioral health on an out-of-network basis (vs only 2% for physical health care). Read More

The rare pediatric disease (RPD) priority review voucher (PRV) program has been extended from September 30 to December 20 (under the “Continuing Appropriations and Extensions Act of 2025”) to allow time for other legislative efforts to renew the program through 2028 (or later). We view the RPD program as critically important to the broader PRV ecosystem because it accounts for ~70% of the PRVs issued to date. The RPD PRV program has previously been extended in both 2016 and 2020 (each for four years), and we expect the program to be potentially expanded again. As it stands now, only companies that received a RPD designation prior to the new December expiration would be eligible to receive a PRV if they gain a qualifying approval over the subsequent two-year period. Read More

Changes may be on the way at Pfizer (PFE-NYSE) with news that activist investor Starboard Value has taken a $1 billion equity stake in the company. Initially, both Ian Read (former Pfizer CEO) and Frank D'Amelio (former Pfizer CFO) supported Starboard. However, they have since rescinded their support for Starboard, and they now support the existing management team. It is not yet clear (yet) what changes Starboard might be seeking at Pfizer. However, it is clear that Pfizer’s share price has materially underperformed, down 30% over the past two years (vs the S&P 500 being up 59%). Also, Pfizer has struggled with a weak launch of its respiratory syncytial virus vaccine, and its attempt to enter the weight management space. Finally, Pfizer has invested upwards of $70 billion in acquisitions since 2020 with debatable results, including Seagen ($43 billion), Biohaven ($13 billion), Arena ($6 billion), Global Blood Therapeutics ($5 billion), and Trillium ($2 billion). Read More

Media reports suggest that AstraZeneca (AZN-NASDAQ) has approached Gilead Sciences (GILD: NASDAQ) regarding a possible merger. AstraZeneca is the largest drug company in the United Kingdom with a market value of ~$140 billion. Gilead Sciences is an American biopharma company with a market value of ~$96 billion regarding a possible merger. A hypothetical combination of AstraZeneca and Gilead Sciences would make for the largest pharma company in the world with respect to market valuation, surpassing previous mega-deals -- such as the $87.6 billion combination of Bristol-Myers Squibb and Celgene Corporation in November 2019. Both companies are at the forefront of COVID-19 with Gilead Sciences offering its antiviral treatment, Remdesivir, and AstraZeneca migrating into the final phases of a new vaccine. The one caveat is that large pharma deals often come about when one party is financially distressed. This is not the case for either AstraZeneca and/or Gilead, in our view. Read More

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