Robust competition and a lack of willing sellers has stifled Merck’s M&A ambition, but CEO Ken Frazier says with valuations coming down possibilities are being created.

Large mergers and acquisitions have dominated the start of 2019: Takeda has completed its $62 billion (€54 billion) takeover of Shire, Bristol-Myers Squibb is set to merge with Celgene in a $74 billion deal, and Eli Lilly has bought Loxo Oncology (albeit for a relatively low $8 billion).

Therefore, it was no surprise that Ken Frazier, CEO of Merck & Co., was asked about the state of biotech M&A and his own firm’s acquisition ambitions at the JP Morgan Healthcare Conference in San Francisco.

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“We continue to look for those assets that we believe can create value for our shareholders and then I think it becomes more possible with more recent valuations – we’re very active,” he told interviewer Chris Schott.

However, the lack of large deals being made by Merck is not due to a lack of trying, he said, but rather the high valuations within the industry, he said.

“We’ve actually tried to consummate some deals. They haven’t worked because we haven’t had a willing seller, or the asset was too robustly competitive because it was a late-stage asset.”

Frazier said he is seeing the valuation of biotech assets broadly coming down, and as this falls “it creates more possibilities.”

Merck’s M&A

Despite Frazier’s words, Merck has not been unsuccessful in its pursuit of inorganic growth, though the large deal – meaning “an important deal, not necessarily large from a size standpoint” – remains elusive.

The firm merged with Schering-Plough in a deal worth $41 billion back in 2009, and since then has made nine acquisitions.

Last year the firm bolstered its animal health division through the $2.1 billion takeover of Antelliq Group, and added oncolytic immunotherapy firm Viralytics for A$502 million ($360 million).