After big M&A year, will pharma move away from massive deals in 2020?

After a year flush with big deals, pharma M&A watchers have been downright spoiled. But with major drugmakers stuck in slow-growth mode—and biotechs outperforming the market in terms of stock price—big players may be looking for smaller "bolt-on" acquisitions in 2020, rather than the massive mergers of the past year.

Instead of going after the likes of Celgene—or even Otezla, the $13.4 billion psoriasis drug Amgen picked up as a byproduct of that deal—major pharmas will likely downsize their transactions to more closely resemble the $2.5 billion Sanofi agreed

For one, major pharmas have seen slow growth or even a decline in their stock prices while biotechs, on the whole, have outpaced their bigger counterparts. And big players have already shown a clear interest in adding relatively small-dollar biotech acquisitions, even paying rich premiums to lock them down. Just look at the Synthorx buy and Merck & Co.'s agreement last week to purchase ArQule for $2.7 billion. 

In Sanofi's case, the drugmaker paid a remarkable 172% premium—$68 per share—on Synthorx's Friday closing price. But in return, it picked up IL-2 immuno-oncology candidate THOR-707, a candidate Sanofi R&D chief John Reed said could "become a foundation of the next generation of immuno-oncology combination therapies.”

to pay for biotech Synthorx earlier this week, Bloomberg reported, citing an investor note from JPMorgan analyst Chris Schott.

In 2019, pharma's average M&A price was $16 billion—a jump from the $13 billion average from the year before. But a couple of factors could drive a downward trend as pharma focuses on snagging biotechs, Schott said.

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