MORE than US$6.4 billion in healthcare deals were announced on Monday (Jan 8) as the annual JPMorgan Healthcare Conference kicked off in San Francisco.

The deals include Merck & Co’s US$680 million purchase of cancer drugmaker Harpoon Therapeutics, Boston Scientific’s US$3.7 billion acquisition of device-maker Axonics and Johnson & Johnson’s (J&J) US$2 billion deal to buy Ambrx Biopharma, whose therapies target tumours with lethal drugs.

Big pharma has been looking to acquisitions to replace blockbusters that are losing steam. Patents are facing looming expiration dates and demand has slowed for once-popular Covid vaccines and treatments. The industry is also sweating government price negotiations under US President Joe Biden’s Inflation Reduction Act.

The end of 2023 brought a frenzy of biotech deals, with weight-loss drug companies and targeted cancer treatments in the highest demand. Harpoon Therapeutics, for example, is developing drugs that harness the body’s immune system to fight cancer, while Ambrx Biopharma is developing antibody-drug conjugates that deliver high doses of drugs directly to tumours.

In some cases, drugmakers are paying more than double a company’s stock price to secure promising therapies. It is a big reversal from a year ago, when pharmaceutical companies were laying off employees and cutting costs.

Investors had a mixed response to Monday’s deals. The acquirers were little changed, while the target companies surged. Harpoon Therapeutics and Ambrx Biopharma were up by more than 100 per cent in trading on Monday. Axonics was up by as much as 21 per cent.

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Still, expectations for big acquisitions remain high. Cytokinetics fell by as much as 8.4 per cent on Monday after it was not included in the slew of deal announcements. The company, which develops cardiovascular treatments, has been courting buyers since last fall, according to Bloomberg News reports.

XBI, a closely watched ETF that tracks biotech companies, was little changed on Monday. That is likely because the deals were not “particularly large” or for “the more heavily speculated on bigger ticket names that investors were watching and hoping for”, said Max Nisen, Bloomberg Intelligence analyst. BLOOMBERG