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CLSA: “Pharma M&A increasing – who’s next in Oz?”

Positive catalysts for ongoing M&A activity in the pharma sector

We believe there are a number of positive catalysts for ongoing pharma/biotech M&A activity in the near term. These include:

1) increasing cost of pharma R&D associated with fewer new drug successes per dollar of R&D spent; and
2) recent US tax reform, leading to increased CY18 cash for big pharma.

If history is any guide, then some of these increased cash balances will be used for pharma/biotech M&A. We have looked at Australian pharma/biotech companies that have the potential to operate globally should their technology be proven or if already proven, be transferred to additional geographies. These companies include: CLINUVEL; Ellex; Medical Developments; Mesoblast; Nanosonics, Osprey; Pro Medicus and Telix.