The new CEOs in biopharma are joining the big players at the billion-dollar chip table
Call it new CEO syndrome.
Every time a new CEO takes over at a biopharma company of some size, the instinctive response is to look for some deal or deals that will help set the tone for the new leader, preferably one that is predictive of a bold — but not reckless — design on future growth.
So perhaps it was no great surprise to see Novo Nordisk figure into the latest round of buyout rumors — this time focused on Global Blood Therapeutics and its lead drug for sickle cell disease. Novo’s new CEO, Lars Fruergaard Jorgensen, perhaps tellingly wouldn’t comment on that to Reuters. But he had plenty to say about his interest in dealmaking.
“We will more and more have to do deals like any other company to make sure we have a broader platform to grow on,” Jorgensen told Reuters’ veteran scribe Ben Hirschler. “In my view we should do smaller deals; low single-digit billions of dollars.”
So more of the ever-popular biotech bolt-ons you can find at the billion-dollar chip table, not big M&A.
Predictably, that strategy includes a taste for deals related to blood diseases, where the company is working on hemophilia, straight through to its core focus on diabetes and obesity. And it’s a departure from the unrelenting focus that his predecessor, the straight talking Lars Rebien Sorensen, had on the company’s pipeline drugs.
Jorgensen is just the latest member of the new CEO club, joining new Eli Lilly CEO David Ricks, who quickly inked a $960 million deal to buy CoLucid and a late-stage migraine drug a couple of months ago, illustrating a return to the deal table for a company that largely shunned billion-dollar deals under John Lechleiter.
Other new CEOs still looking to establish their own M&A style include Gilead CEO John Milligan and Biogen CEO Michel Vounatsos, both leaders of biopharma companies that are all but being ordered by analysts to land a few big fish. Mark Alles, the new CEO at Celgene, has a different kind of challenge. Celgene set the industry’s fastest pace on drug deals under Executive Chairman Bob Hugin and now industry observers will see if Alles and his pro BD team can keep up the same frenetic pace.
There certainly are risks to this game. Relatively new Sanofi CEO Olivier Brandicourt is still working on making a good first impression at the deal table, with little success. After getting shoved aside on Medivation, Actelion openly dissed the company’s takeover attempt in explaining why it went with the veterans at J&J. Next time around, Sanofi investors will expect to see success.
Next up: New GlaxoSmithKline CEO Emma Walmsley, who gets the top job April 1, as generic competition starts to really kill the Advair franchise. She faces her own unique set of expectations at a company with one of the least exciting pipelines in Big Pharma.
Soon we’ll see if she will look to the deal table to accomplish something that Andrew Witty was never able to succeed at; Create a slate of new blockbuster drug franchises, outside of the vaccines arena. If so, she’ll need a few billion-dollar chips of her own.