Tanking Biotech Stocks Will Mean a Big Year for Deals. Who Could Benefit.

Nearly two years after biotechnology stocks began to tumble, executives at small and midsize companies in the space are finally accepting that share prices aren’t bouncing back anytime soon.

With reality setting in, it’s a buyer’s market for companies looking for acquisitions and partnerships, according to many of the pharmaceutical and medical technology executives who gathered at this year’s

J.P. Morgan

healthcare investor conference, which wrapped up in San Francisco on Thursday.

“We’re getting lots of calls from companies that literally we talked to six months ago,” says Geoff Martha, CEO of


(ticker: MDT), a medical device manufacturer. “We said, ‘Hey, look, we’ll buy you for X amount.’ And they’re like, ‘No way, we’re worth [two times that].’ And now they’re calling back and say, ‘Hey, can we restart those conversations?’”

The change to the medical device and biotech sector has come just in the past few months. As recently as April, when the

SPDR S&P Biotech exchange-traded fund

(XBI) was down around 40% from its early 2021 peak, Merck CFO Caroline Litchfield told Barron’s that biotech leaders still thought their firms were worth what they had been before the market fell.

That’s no longer the case, executives said on the sidelines of the J.P. Morgan conference. Nine months later, the XBI is trading around the same levels, but biotech boards are no longer counting on the prices ticking back up soon.

“It’s changed completely in terms of both the deal structures they’ll contemplate, the valuations that they’re thinking about,” says Andrew Dickinson, chief financial officer of

Gilead Sciences

(GILD), a large cap biotech.

“Things really shifted in the middle of last year,” adds Gilead’s CEO, Daniel O’Day.

This year’s J.P. Morgan conference, the first in-person version of the gathering since 2020, was subdued;…


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