00:00We have an environment where M&A really picked up in health care last year. Something like nearly a 50
00:05percent rise in it. Eric is 2026 the same the more. What do you expect pharma deal activity to look
00:12like. Thank you then. I think it's going to be same or more and it's already started that way. 25
00:18actually was a very good year as you suggested. We had we tracked the billion dollar plus transactions pretty rigorously
00:25and we've seen a record year last year on that billion dollar plus with 26 transactions.
00:30last year. And what's very fascinating about that was we also saw the the breadth and the depth of the
00:36deal making was pretty wide. So we have seen early stage mid stage late stage commercial deals. We've seen smaller
00:44deals larger deals. We've seen deals in different therapeutic categories which basically is a good sign of healthy environment for
00:50deal making. And this year continued that way. So far in the year we have seen six transactions greater than
00:56a billion dollars again in that with that sort of run rate basis. It is
00:59sort of poised to be a record year as well. And the activity we see from the pharma is no
01:06less. And the core driver of that is actually as was just for the presented the the farmers need for
01:13for new products and the innovation without innovation no product gets sort of to to be bought if you will.
01:20And we are in that sort of early innings of the scientific revolution which will further fuel the discoveries and
01:27new medicines and the pharma will acquire them.
01:29Krishna you agree. Another record year. I completely agree. From our perspective in this space we're exceedingly busy right now.
01:37As you noted Q4 was amazing for biotech and it's continued this year. And the drivers are what Eric said
01:45which is one is strategy. You have the large pharmaceutical companies which have these patent
01:50cliffs coming off. They're going to lose exclusivity and they need to fill that pipeline. So there's a strategic need
01:55to do these deals. And the larger pharma companies also have
01:58a exceeding amount of financial ability and capital to do that. So they need to deploy that cash and their
02:04investors want to see them pursue growth and fill those pipelines.
02:08And the way the ecosystem is built now you have these smaller innovative companies who are focused on smaller therapeutic
02:14areas but who are going deep there.
02:17So they are perfect counterparties and transactions. And you know the pace of innovation the therapeutic areas has never been
02:26more exciting than right now.
02:28And I'm sure you'll have questions about where we're going in areas like that. But I think the other part
02:33is sentiment is very bullish.
02:35Well I wanted to dig in on that because obviously it seemed like there was so much momentum coming into
02:40the beginning of the year.
02:41The fourth quarter of last year alone was you know we saw such a flurry of these big over five
02:45billion dollar biopharma deals.
02:47But to start the year I know you said there have been a few over a billion but it hasn't
02:51been what everyone expected. Like what is keeping things at bay.
02:54Is it just taking longer to get things over the line or is pharma getting spooked.
02:58Yeah. Go. I think I don't think it's getting spooked. I think activity the discussions transactional matters are as high
03:07as they've ever been.
03:08I think you know some of this is episodic deals sometimes take a little bit longer to happen than before.
03:14But in terms of the interest the processes were involved in.
03:18It's it's busier than ever. I expect this year to be better than last year.
03:23Yeah I agree with Krishna. I mean I think generally it always feels like it's less than what people expect.
03:28It's the reality of it. However it has a good it's a good good activity out there.
03:33We're seeing it. We know our backlogs and we know the level of interest and it's across the large farmers.
03:39It's not like three farmers interested and seven others aren't. I think across all farmers there's interest because there's need.
03:45And I think it's going to continue that way. But as Krishna said I mean deal activity is sometimes episodic.
03:50You're going to see a few you know over a period of four months and then you have seen like
03:56let's say in last year there was a pause for about three four months in earlier part of the year.
04:02And then between sort of mid-April to early July we've seen 10 transactions in a matter of seven weeks.
04:09So we see that in deal making.
04:11And generally speaking as you said I mean the fourth quarter generally is the busiest because people try to wrap
04:16the year or sometimes get ready to JP Morgan health care conference and so on and so forth.
04:20So we see this sort of episodic and but I'm absolutely not seeing any pause or any concern from the
04:26pharma at this point.
04:27So the big pharma giants have all this farm firepower to buy assets. What about that pool of assets. How
04:33scarce is it. And what does that mean for things like competition and valuation.
04:37Excellent question. So there's a lot of assets out there and they're all competing to be the differentiator if you
04:44will.
04:44I think in science the trials are important. The data is important and to differentiate or the molecules properties are
04:51very important.
04:52So there is a lot of assets but there are not exceeding amount of you know the best assets the
04:59pharma also also part of the deal flow.
05:01I mean if if the pharma pharma isn't buying based on something is cheap if you will or something is
05:07you know you know is is within reach.
05:12It's just more like is it sort of the data differentiated. Does it fit with their portfolio. Does it fit
05:17with their broader strategy.
05:19As long as all those boxes are checked the deal will happen and does happen. So there is scarcity of
05:25very very good assets.
05:26But but there is enough sort of to to fill in the pharma sort of gaps if you will that's
05:31in the coming years and kind of pivoting from there.
05:34I mean there's been this narrative across M&A for the past few for the past year that kind of
05:39we're in an anything goes environment regulatory wise.
05:42Do you think that applies in health care and biopharma as well and could we see some of these mega
05:47MLEs or is that just not the need yet.
05:50We are in an environment right now where there's an emphasis on getting products in the hands of companies that
05:58can take them further develop them and really get to the patients.
06:02And so that's a very positive environment for transactional matters. So from that perspective absolutely we're seeing more transactions happen
06:10more transactions go through.
06:11I think parties at the outset have a better certainty now that on timing and getting deals through the bigger.
06:20I mean on that it's been years since we saw something over 20 billion dollars. Do you think this is
06:25the year where we finally see that.
06:26Yeah. I mean if there is a year it will probably be this year or next year quite frankly because
06:30the current environment is fairly business friendly from the regulatory perspective.
06:34And and I think people you know are probably considering whether it makes sense for them to do these larger
06:41pharmas because the as you said I mean there's been very very few very large deals and the very large
06:47pharma.
06:47The last far large pharma deals have been on 2008 2009 quite frankly but the regulatory environment wasn't really permissible
06:56for that either.
06:57So I think that has changed quite a bit now and I think there is sort of a momentum towards
07:01that whether that happens or not the implications of that is a very different question.
07:05But if one wants to do a big merger our guess is that that's certainly within the cards.
07:10Christian where would that come from.
07:12What is the sector that you think the biggest deals are going to be coming from.
07:16Is it obesity oncology something different.
07:18I think the areas of real interest that I see the most activity are one is the intersection of immunology
07:26and oncology.
07:26So you know this is using the body cells to combat cancer.
07:30There's a significant amount of interest there whether it's B cell depletion or car T deals.
07:36I expect that to continue.
07:38That's a really exciting area and especially for the patients.
07:41The level of innovation there is unbelievable.
07:44And then the metabolic right.
07:46This is you know the traditional GLP ones and ML and add ons.
07:50But also there we're seeing people interested in alternatives to that.
07:54So those are the two areas that I think are going to have the most interest this year.
07:58And if you look back to M&A and also licensing deals as well which are a big part of
08:03the life sciences ecosystem.
08:06Both of those were the two leaders leading up to the end of the year.
08:09So those are my two areas.
08:10I think if I agree with with with Krishna but if I would answer it as the elective it follows
08:17innovation.
08:18The reason we have now more immunology transaction the broader autoimmune deals or we have more cardio metabolic transactions is
08:26because of the innovations.
08:27Right.
08:27We if we had a GLP one available 10 years ago.
08:31I promise you people would have bought it.
08:33Right.
08:33But I think now with this innovation in that program metabolic space.
08:36I think we're seeing a lot of activity.
08:39Oncology has been the most sort of attractive sector historically in the last 20 years 15 years because there was
08:45a lot of innovation happening in in oncology.
08:47Right.
08:47Right.
08:48I mean a lot of the specific sub type oncology or cancer as a disease is turned into a chronic
08:56disease in some sort of categories in certain mutations of breast cancers and prostate cancer and the like.
09:03So.
09:04So there was a lot of the activity there now in cardio metabolic and autoimmune.
09:08I mean I would also highlight neuroscience as one up and coming sector for the for the years ahead because
09:14I think there's a lot of shift towards addressing that as well.
09:17But broadly the innovation will determine where the deal actually.
09:21By the way you're allowed to disagree with each other.
09:22I know you're good friends.
09:23I think you'll still be friends after this.
09:25I think Eric just disagree.
09:27I was going to say a very diplomatic way to disagree.
09:31We're going to have to have you both back alongside Michelle.
09:33Thank you so much.
09:34Thank you for joining.
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