Life science trends 2025 – The economy
Av 2025 has barely begun and already some giant deals have been announced. British GSK announced on the first day of the JP Morgan conference in San Francisco last week that the company is acquiring American Idrx, which develops drugs for cancer of the gastrointestinal tract. The deal will cost GSK $1 billion upfront, with potential additional milestone payments of up to $150 million
Just a few hours later on Monday, an even bigger deal was announced at the huge meeting in San Francisco. Johnson & Johnson announced that the company is acquiring CNS company Intra-Cellular Therapies for $14.6 billion.
Compared to last year, activity for acquisitions and mergers in life sciences is expected to increase this year, according to a report from the investment bank Oppenheimer. One reason for this, according to the bank, is that the incoming administration in the US is considered to be more business-friendly than the outgoing one.
Oppenheimer points out in particular that the Federal Trade Commission, the FTC, is now getting new leadership. The FTC has been a red flag for big pharma in recent years, and anyone who follows American industry media has repeatedly read about FTC-initiated investigations and litigation involving pharmaceutical companies in the United States.
One reason that suggests that the large pharmaceutical companies are making more acquisitions this year is that they need to prepare for upcoming patent expirations. Patents for several blockbuster drugs expire between 2027 and 2029. This includes the immunotherapies Keytruda and Opdivo, the blood clot inhibitor Eliquis and the HPV vaccine Gardasil.
The trend in the sector in recent years has been for larger companies to acquire smaller, often unlisted companies, rather than for large companies to merge. It is a trend that Oppenheimer expects to continue.
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If we look back at the past year for life science companies in Sweden, we can see that there were many bankruptcies. Medfield Diagnostics, Coala Life and Icellate Medical are some examples. This year has not started better. Already in the first week on the job, we at Life Science Sweden and Medtech Magazine reported on a couple of bankruptcies, including the collapse of the Lund-based company Ziccum.
One explanation is that investors have become more cautious about putting money into the sector. There have long been more biotech companies in Sweden than there is investment capital for biotech. The fact that there are tough economic times does not make things better, but instead contributes to investors being even more cautious about what they put money into.
The recession has been tougher for the smaller companies in the industry than for the larger ones. The large pharmaceutical companies are seen as safe and independent of the economic cycle by pension giants and investment companies when they choose which companies to invest in. Smaller unlisted biotech companies, on the other hand, are largely dependent on venture capital and niche investors who hold on to their money more tightly in tough times.
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The economy is of course also affected by politics. As STUNS Life science Director Björn Arvidsson recently pointed out in a column in Life Science Sweden, legislation in Sweden is largely shaped in the EU and several regulations that affect Swedish life science are developed there.
After the EU elections in June, a number of new MEPs have been elected and last autumn the Hungarian Olivér Várhelyi was appointed as the new Health Commissioner. He will then be an important figure for both healthcare and life science in the Union.
Várhelyi is a controversial politician who has called other EU members “idiots” and his election has been criticized for his lack of experience in the healthcare sector, see previous article in Life Science Sweden.
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The economic situation in Sweden is also affected by developments in the US, as the sector is global. A negative trend for the sector on the other side of the Atlantic could slow down the recovery that is expected here. Conversely, positive growth for the industry in the States could strengthen a recovery in Sweden and the rest of the Nordic countries.
The US has been a world leader in medical research for decades. The country has the most Nobel Prize winners in medicine, and the largest pharmaceutical companies and the most innovative biotech companies are located there.
It is unclear what ambitions President-elect Donald Trump has in life science, as his statements have been contradictory.
However, the fact that he is appointing vaccine skeptic and conspiracy theorist Robert F Kennedy as Minister of Health gives the industry reason to be concerned. More than 17,000 doctors in the US have also signed a protest list against Kennedy becoming Minister of Health. With the appointment, Kennedy will be most responsible for the US Food and Drug Administration (FDA). The choice of Marty Makary, as commissioner of the FDA who will report to Kennedy, is considered by many to be less controversial, although that choice also reflects a turnaround.
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So how will the sector develop in Sweden in the coming year? Will we see fewer bankruptcies and more investments in Swedish biotech? Yes, we are probably moving towards brighter times, but it may be slow. According to analysts, the recession will persist for part or even all of 2025, even if we see a gradual recovery.
Will the large international deals that have already gained momentum at JP Morgan this week also be reflected in Sweden? In 2024, there were a couple of heavy international acquisitions of Swedish biotech companies. I am mainly thinking of the purchases of Calliditas and Olink.
It is likely that we will also see some acquisitions of Swedish companies this year, although most of the large deals are expected in the US. Big Pharma will likely continue to acquire, especially in the areas of cancer and neurology, which have been important areas in the companies' pipelines in recent years. Obesity is also an area that will remain hot for large pharma companies in the wake of the success of Ozempic.
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