International Biotechnology Trust Plc (LSE:IBT, OTC:IBITF) portfolio manager Ailsa Craig joined Proactive's Stephen Gunnion to discuss the surge in biotech M&A activity, following Vertex Pharmaceuticals' acquisition of Crinetics at a 102% premium.
Craig said the deal wave reflects a structural dynamic: most new drugs now originate from biotech, while large pharmaceutical companies face a significant wave of patent expiries and hold substantial cash resources. Vertex's move into rare diseases and chronic therapies makes strategic sense as it diversifies beyond its cystic fibrosis franchise — and the premium paid reflected Crinetics' strong independent position. "They would be perfectly happy to stay independent. And Vertex had to pay up if they wanted to buy them," Craig said.
She outlined how IBT evaluates investments using many of the same criteria as pharma business development teams — focusing on chronic therapies, attractive valuations, strong intellectual property and companies capable of remaining independent, making them compelling acquisition targets.
Around 40% of IBT's portfolio currently meets these criteria, compared with around 10% of its benchmark - a positioning Craig believes leaves the trust well placed to benefit from continued industry consolidation.
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