
On the up? A new year always brings the promise of a spate of M&A in the healthcare sector, with JPM’s conference bringing together the biggest, best and brightest. After a rather depressing 2024 (and 2023 . . . and 2022 . . .), 2025 has proved fruitful so far, with over US$20bn of deals made by big pharma and others.
By far the largest M&A deal was J&J’s acquisition of neuropsychiatry company Intra-Cellular Therapies, coming in at US$14.6bn. The acquisition gives J&J access to Intra-Cellular’s marketed product Lumateperone for major depressive disorder, as well as a pipeline of therapies that includes treatments in Phase II for anxiety and Parkinson’s disease.
Last year, we published a note explaining the trends in neuroscience and, highlighted that J&J would like to expand its neuroscience pipeline; clearly, its,thinking has not changed. We cannot help but be reminded of Karuna’s US$14bn acquisition by BMS in December 2023 as yet another big pharma company moves into neuropsychiatry. Almost as if to nail the point home, as part of this year’s spree, Biogen has also shown interest in fully acquiring Sage Therapeutics who, again, has a marketed product (Zurzuvae) for major depressive disorders. Although our bench-science backgrounds in this area might make us slightly biased, we believe that neuroscience and psychiatry are part of the final frontiers of drug discovery and, with the continued improved understanding of underlying disease, we are well on the way to finding successful treatments.
We were also pleased to see the US$1.15bn acquisition of oncology small molecule company IDRx by British big pharma GSK. IDRx is a US-based biotech, which has a lead asset currently in Phase I for gastrointestinal stromal tumours (GIST). The lead asset is being developed as both a first- and second-line treatment as
IDRx highlights how the current standard-of-care treatments have efficacy limitations. IDRx’s asset was seen to have superior efficacy in pre-clinical studies and has received Orphan Drug Designation, as well as Fast Track Designation, from the FDA. This is a good example of the potential of early (Phase I) stage oncology biotechs with validated clinical data, targeting tumours with high unmet need being targeted by Big Pharma. Please see Figure 1 for a list of all the M&A so far in 2025.
If you think it is bad here . . . While sentiment surrounding the state of the UK economy may be poor, things could always be worse, as seen in Jersey, where the ancient practice of bloodletting has been recommended to the residents of the island as a method of tackling water contamination. Supplies have been contaminated with per- and poly-fluoroalkyl substances (PFAS), also known as ‘forever chemicals’, which are potential carcinogens. Contaminated groundwater was discovered in the 1990s, when PFAS was used in firefighting foams during weekly training exercises at Jersey airport. However, residents were not moved
to mains water supplies until 2006. Recent blood tests carried out on Jersey residents have shown elevated levels of PFAS. As a result, a scientific advisory panel suggested bloodletting. This procedure (which historically was performed by leeches) removes controlled volumes of contaminated blood from a vein, with the body then naturally replenishing the lost blood. The process costs £100,000 upfront, and up to £200,000 a year to treat 50 people. No leeches will be harmed during this therapy as, thankfully, technology has moved on.
In case of emergency, break NHS data. Somewhere between the Chancellor, Prime Minister, and Labour’s Election Manifesto, which saw the party accede to power on what is being called a weak mandate for change by Labour’s own thinktank despite the optical 174-seat majority, our Cabinet has badly – and quickly – painted itself into an economic corner.
As few will need reminding, since the election, we have heard promises on the pursuit of growth and a “shamelessly” pro-business agenda that starkly contrasts with Labour’s politicking/action, which included a downbeat assessment of the UK economy (which materially hurt sentiment), the discovery of a ‘£22bn black hole (making consumers retreat further), and sweeping public sector pay rises (eg the 22.3% to junior doctors, explaining a good chunk of the ‘black hole’). This was compounded by Labour’s maiden budget in Autumn 2024, which broke its manifesto nil-tax-hike promise in all but name, passing on an additional £25bn NI cost to businesses. This saw companies cry foul and the tax burden rise to an unprecedented level in UK history. It seems, optically at least, that the gilt-yield spike of the past fortnight has caused some sudden realisation of the need for nearterm action; ‘future plans’ are not enough to persuade the markets that Labour is serious about growth, especially when all fiscal decisions look to be anti-growth (eg inheritance tax changes and the NI rake).
Sadly, this last-minute panic appears to have manifested in the Chancellor hopping on a plane to China. In our view, this was hoping to replicate the trolley-dash that was the ‘UK investment summit’ in October of 2024, where some accounts suggest that the government was more interested in totting up the click-bait worthy total
investment (c.£63bn) rather than actually working on the details/or considering the likelihood of such commitment ever transpiring. We also note that a large chunk (c.25%) of the announced £63bn was actually agreed prior to Labour coming to power. Sadly, this time Rachel Reeves was not able to get a ‘big ticket item’ and only returned with a £600m future investment.
In what appears to be utter desperation, the Prime Minister then smashed the emergency glass and announced that Tech firms can “mine NHS archives to fuel the AI revolution” (and presumably garner some punchy investment into the UK from Menlo Park/Silicon Valley). We have written at great length in the past how the NHS data set is a true sovereign asset, unrivalled anywhere in the world. Whilst it is not perfect (investment is required to curate the data), it genuinely represents one of the richest examples of cradle-to-grave Healthcare data for a whole country’s people and has been valued at several billion pounds by EY (we believe it is worth much more, and actually worked with EY at the time of this assessment to inform them as they got up to speed on the value of data), and that it could liberate £9.6bn of benefits per year (to the UK). Needless to say, large US tech and AI companies would love to get their hands on this data.
Whilst Peter Kyle, the Science & Technology Secretary, said the government will always be in control of patient data and that this project would put the UK at the heart of the global AI revolution, we urge caution. There are many examples of healthcare data leaks and also – and perhaps most importantly – AI does not require continued access to data sets (especially very large ones) in order to learn: just once is enough. Perhaps the government should ask The Royal Free Hospital in Hampstead how its relationship worked out after Deepmind (acquired by Google for £400m in 2014) had secured access to a portion of its patient data set. It was not long before a number of promises about partnerships and data-governance fell by the wayside and the data sharing arrangement was eventually found to have breached the Data Protection Act.
The University of Cambridge has since called this a “cautionary tale for healthcare in the algorithmic age”. Another example of the moving goal posts surrounding governance of this NHS-big-Tech relationship is exemplified by Deepmind’s original promise that NHS partner data “will never be connected to Google accounts or services or used for any commercial purposes like advertising or insurance”. However, in November 2018, Google ‘took a tighter grip’ on the data of its subsidiary (though we note at the time that Google was quoted as saying patient data remains under our partner’s strict control . . . ”). To use two idioms at once, if the Prime Minister and Science & Technology Secretary are intent on selling the family silver to immediately boost growth prospects/UK investment, then we would remind them that you can shear a sheep many times but kill it only once. In our view, opening the NHS data set to overseas Tech companies is akin to the latter. Therefore, the price paid for access to the data had better be good.