Large innovative US pharmaceutical companies will continue seeking bolt-on acquisitions as the need for larger transactions has declined, says the ratings agency Fitch, adding that consolidation is the watchword, as players search for scale, efficiencies and the next blockbuster drug. As pipelines improve, Fitch says “big pharma” will be looking for individual therapeutics and smaller biotech companies to bolster drug portfolios, and transactions will focus on innovative treatment platforms through acquisitions or joint ventures.

At the same time, the ratings agency notes that the need for large acquisitions as a driver of organic growth is being lessened by positive trends in drug development pipelines, new product commercialization and moderating patent expiry risks.

In the main, good access to funding at favorable rates is aiding M&A activity, Fitch believes, while underlining that a perceived M&A shift toward smaller targets reflects increased drug approvals.

According to figures presented by the ratings agency, new molecular entity (NME) approvals increased by nine in 2015 against 2014, and the FDA cleared 45 novel medicines for marketing, up from 36 in 2014.

Biologics accounted for 12 of the 2015 approvals, compared with 10 during 2014, More than half of the new approvals, the figures reveal, were for cancer therapeutics (33%), followed by cardiovascular disease (17%) and infections (8%). Fitch said it expects approvals to remain relatively strong in the intermediate term, despite lagging during the first four months of 2016. Through April of this year, it said eight NMEs were approved.