Pharmaceutical giant Amgen is wrapping 2022 with the largest pharmaceutical acquisition of the year (so far).
The company announced on Monday it will acquire biotech firm Horizon Therapeutics for $27.8 billion, approximately $116.50 per share of the publicly held drugmaker known for developing drugs that target rare diseases.
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M&A activity is a different ball game in 2022
M&A activity was rather bleak in 2020 and 2021. Biotech startups saw record investments in private market funding through venture firms that became interested in COVID-related innovations. Moreover, the IPO market flourished — an unprecedented 143 biotech startups went public in 2021, creating funding opportunities for biotech that allowed them to avoid a buyout for as long as possible.
That was expected to change in 2022. Flush with cash, pharma companies were eyeing new innovations in biotech to replenish their expiring patents. But M&A activity hasn’t been in the acquiree’s favor. Ignoring Amgen’s anomaly acquisition move, around 226 biotech companies were acquired in 2022 for approximately $80 billion according to Crunchbase News, a bleak comparison to M&A activity in years past.
Rare disease drugs turn a quick profit
But Amgen’s first foray into rare disease with the Horizon acquisition is a smart one. Because rare diseases (by definition) affect so few people, drugs that target them are very well-funded by the National Institutes of Health as a means of influencing pharma companies to enter the rare disease development game. And since they’re so rare, insurance companies are extremely likely to cover them.
Rare disease drugs are a good bet for drug companies looking to turn a profit. Horizon Therapeutics’ star therapeutic is Tepezza, a first-of-its-kind drug that targets a rare thyroid eye disease. Horizon purchased Tepezza in 2017 for $145 million (and ended up promising more cash depending on if the drug would work). The drug was approved by the Food and Drug Administration in 2020.
Illustration: Dom Guzman
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