Biotech IPO window is open but big pharma M&A sets the pace: Bankers

Public markets are beginning to reopen for biotech companies after several years of muted activity.

But the strongest companies may still be more likely to sell themselves to Big Pharma rather than testing investor appetite in an IPO, according to JPMorgan’s top healthcare dealmakers.

The IPO window has reopened for high-quality biotech companies, but investors are far more selective than they were during the pandemic-era boom, Juha Anjala and Roy Wouters, co-heads of JPMorgan’s EMEA healthcare investment banking, told CNBC. 

The current market is also prompting many biotech companies to pursue a dual-track process: preparing for an IPO while simultaneously engaging with potential acquirers. 

In some cases, companies are ready to list, only to be bought by large pharmaceutical groups before reaching the public markets, Wouters said, adding that they’ve advised on several such deals recently.

The trend reflects a broader recovery in healthcare dealmaking, especially in biopharma, where drugmakers are under pressure to top up their pipelines ahead of major patent expirations later this decade and into the early 2030s.

Big Pharma buyers are well funded and increasingly willing to take larger bets, the bankers said. Strategic buyers are “out there looking to deploy capital” to deepen their pipelines, while shareholders are increasingly supportive of M&A as a way to drive growth, said Anjala.

The result is a more competitive market for the highest-quality biotech assets, particularly those with differentiated technology or exposure to large therapeutic areas such as oncology, metabolic diseases, and infectious diseases. 

For biotech founders and investors, that creates a stronger exit market than existed a year or two ago – but not necessarily a simple one. As the IPO window opens, Big Pharma’s hunt for growth is expected to continue to set the pace.