On 5 November 2024, Donald Trump was elected as the US president for the second term, marking the return of Republican leadership following President Joe Biden’s administration, which saw significant policy changes for the biopharmaceutical industry, such as the Inflation Reduction Act. Although Trump did not disclose his intended healthcare policy changes during his campaign, his return to the White House may drive biopharmaceutical merger and acquisition (M&A) deal activity, according to GlobalData, a leading data and analytics company.

The increase in M&A activity is expected due to the potential departure of Lina Khan, the current chair of the Federal Trade Commission (FTC). Under Khan’s leadership, the FTC placed increased scrutiny on M&A activity. For example, the FTC filed a lawsuit against Sanofi’s $750 million licensing agreement with US-based biotech Maze Therapeutics in December 2023. Following the lawsuit, Sanofi terminated the licensing agreement involving Maze Therapeutics’ glycogen synthase 1 inhibitor MZE001, which is currently in Phase I trials for the treatment of Pompe disease.

Alison Labya, Business Fundamentals Analyst at GlobalData, comments: “A change in FTC leadership may encourage more M&A deals by large biopharmaceutical companies, as well as create a more favorable environment for smaller biotech companies to exit via acquisitions.”

Under the first Trump administration, the Foreign Investment Risk Review Modernization Act was enacted in 2018, granting US regulators greater authority to review and block foreign acquisitions.

Labya continues: “It remains uncertain whether Trump’s ‘America First’ foreign policies will pose challenges for companies outside of the US, especially those headquartered in China, looking to acquire US-based biopharmaceutical companies.”

To bypass Trump’s proposed import tariffs – 60% on goods from China and 20% on imports from other ex-US countries – ex-US biopharmaceutical companies may acquire US facilities to manufacture drugs domestically for the US market. It remains to be seen how Trump will address the potential increased operational costs and subsequent drug price increases associated with US manufacturing.

Labya concludes: “Furthermore, Trump’s plans to appoint Robert F Kennedy Jr – a known anti-vaccine advocate and critic of the FDA – as the head of the US Department of Health and Human Services may create challenges for future US drug approvals, which could dampen investor confidence and slow innovation in the biopharmaceutical industry.”