M&A activity in the global healthcare sector is picking up with big pharma looking to replace revenue from drugs coming off patent
\nComes in a year of mixed results for the global healthcare sector, with the S&P 500 Health Care index up 3.47% YTD and local sector down 21.92%
\nMorgans healthcare analyst Iain Wilkie said several ASX healthcare stocks with late stage or approved products could be M&A targets\u00a0<\/p>\n
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Healthcare globally is having an M&A boom not seen since before Covid.<\/p>\n
Big Pharma Vertex Pharmaceuticals, which is listed on the Nasdaq, this week announced it had made a US$10 billion takeover bid for endocrinology-focused Crinetics Pharmaceuticals, which also calls the US exchange home.<\/p>\n
At US$85 per share, the offer represents a ~102% premium to where Crinetics shares were trading before the announcement.<\/p>\n
Vertex has been on a mission to build out its next generation of drug products beyond its longstanding cystic fibrosis portfolio.<\/p>\n
The deal brings the company Crinetics\u2019 US FDA and EMA approved adult acromegaly treatment Palsonify, plus a late-stage candidate, atumelnant, targeting congenital adrenal hyperplasia.<\/p>\n
Vertex expects the combined assets to generate more than $5 billion in annual revenue with the deal receiving unanimous board approval from both companies and expected to close in Q3 CY26.<\/p>\n
The deal is the fourth transaction worth at least US$10 billion so far this year as big pharma hunts de-risked, late-stage assets. Now experts think that effect could trickle down to M&A on the ASX.<\/p>\n
\u201cAnnounced M&A deals in public markets for calendar 2026 is ~US$143 billion so already outpacing 2025,\u201d Morgans healthcare analyst Iain Wilkie told Stockhead.<\/p>\n
\u201cIf the pace holds, full-year 2026 could rival or exceed the pre-Covid record set in 2019.\u201d<\/p>\n
The last big M&A boom was back in 2019 led by Bristol Myer Squibbs\u2019 US$74 billion buyout of Celgene and AbbVie\u2019s US$63 billion acquisition of Allergan, pushing the year\u2019s total deal value to a record ~US$224 billion.<\/p>\n
Like today, Wilkie said the driver was patents due to expire and Big Pharma looking to buy growth rather than waiting on R&D.<\/p>\n
\u201cThere\u2019s a big patent cliff coming at the moment, particularly in US pharma stocks,\u201d he said.<\/p>\n
\u201cThe top 20 drugs due to come off patent between 2025 and 2028 last year made a combined US$176 billion in sales.\u201d<\/p>\n
Pharmaceutical giant Merck is a good example with its leading anticancer drug Keytruda, accounting for ~55% of its revenue<\/a> and recording sales of almost $31.7 billion in 2025, due to come off patent in 2028.<\/p>\n \u201cCompanies are looking to reload their pipelines to bolster the impact of drugs coming off patent,\u201d Wilkie said.<\/p>\n \u00a0<\/p>\n Undervalued healthcare stocks on M&A radar<\/p>\n For all the dealmaking, healthcare equities have had a mixed year, with the picture shifting sharply in recent weeks following signs of a rotation back into the sector.<\/p>\n As of June 30, the S&P 500 Health Care sector was up 3.47% YTD having rallied 6.62% in June alone.<\/p>\n Despite rising 13.31% in June to be the top performing sector for the month, the S&P\/ASX 200 Health Care Index (ASX:XHJ) is down 21.92% YTD.<\/p>\n \u201cRare diseases, orphan indications and later stage assets could be a target, and the M&A activity gives needed positive sentiment,\u201d Wilkie said.<\/p>\n \u00a0<\/p>\n Neuren\u2019s strong clinical pipeline and approved drug<\/p>\n Wilkie said Neuren Pharmaceuticals (ASX:NEU)<\/a> could be a M&A target with its lead asset trofinetide (marketed as Daybue in the US), the first and only FDA-approved treatment for rare paediatric neurological disorder Rett syndrome.<\/p>\n Neuren out-licences the drug to Nasdaq-listed Acadia Pharmaceuticals for North America and collects royalties and milestones.<\/p>\n The FDA also approved a powder formulation of the drug called Daybue Stix in December 2025.<\/p>\n Neuren has earned more than $500 million of cumulative revenue, consisting of royalties and milestone payments, since Acadia launched Daybue in the US in 2023.<\/p>\n Recent European regulatory progress on trofinetide is set to add a second royalty geography.<\/p>\n Neuren also has another second asset NNZ-2591, which the company believes could have greater commercial potential.<\/p>\n NNZ-2591 is in various stages of clinical development for other rare paediatric neurological conditions including Phelan-McDermid, Angelman, Pitt Hopkins, Prader-Willi syndromes, all under FDA orphan drug designation.<\/p>\n \u201cNeuren has a strong late-stage pipeline and drug already approved so reasonable revenue,\u201d Wilkie said.<\/p>\n \u00a0<\/p>\n Clarity, Telix in M&A frame as radiopharmaceuticals heat up<\/p>\n Clarity Pharmaceuticals (ASX:CU6)<\/a> and Telix Pharmaceuticals (ASX:TLX)<\/a> could also be potential M&A targets with radiopharmaceuticals a strong growth area in healthcare.<\/p>\n Clarity has developed a proprietary copper theranostics platform with Cu-64 for imaging and Cu-67 for therapy.<\/p>\n The company has various late-stage trials underway including two phase III trials dubbed Clarify and Amplify for prostate cancer diagnostics and a Phase 1\/2a trial Secure for prostate cancer treatment.<\/p>\n It also preparing for a Phase III trial for neuroendocrine tumours diagnosis after a successful Phase II trial called Disco.<\/p>\n \u201cClarity has a differentiated asset to what has already been approved with strong clinical data,\u201d Wilkie said.<\/p>\n Telix\u2019s flagship product Illuccix is a US FDA approved PSMA PET imaging agent for prostate cancer.<\/p>\n Telix also has a strong clinical pipeline including Zircaix, a kidney cancer imaging agent with the company finalising a resubmission to the US FDA for approval.<\/p>\n The countdown is also on to a PDUFA date of September 2026 for its brain cancer imaging agent Pixclara, the deadline by which the FDA must complete its review and issue a decision on approval.<\/p>\n Telix\u2019s TLX591 is an antibody-based radioligand therapy for prostate cancer is currently in a Phase III trial.<\/p>\n The company has also been an acquirer itself in recent years including of ARTMS and RLS Radiopharmacies.<\/p>\n \u201cTelix been vertically integrating and building out its entire value chain, including production, manufacturing and distribution,\u201d Wilkie said.<\/p>\n \u00a0<\/p>\n Dimerix targeting a rare kidney disease<\/p>\n