Three stocks to profit from the boom in pharma M&A

Ailsa Craig picks three stocks that should capitalise on the M&A trend in the pharmaceutical sector, either as potential targets or as well-established acquirers of other rivals.

Each week, a professional investor tells us where she'd put her money. This week: Ailsa Craig of the International Biotechnology Trust.

We expect that mergers and acquisitions (M&A) activity will remain at high levels in the biotechnology sector over the next few months. Larger pharmaceutical and biotechnology companies will continue to snap up smaller rivals because these small companies are better at developing innovative drugs. Despite Donald Trump's recent comments about the high price of US drugs, it will be difficult to implement policies that force healthcare companies to reduce the cost of medicines. However, increased scrutiny may persuade firms not to increase prices as much as they would have done. That would provide an additional incentive for large companies to acquire smaller firms in a bid to increase earnings, as price curbs will otherwise have a negative impact on sales and profit growth. We have chosen three companies that capitalise on this M&A trend, either as potential targets or as well-established acquirers of other rivals.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Explore More

Ailsa Craig has been the lead portfolio manager of International Biotechnology Trust (IBT) since 2021.

Ailsa has managed IBT since 2006. She began her career at Insight Investment / Rothschild Asset Management before joining Baring Asset Management as a research analyst. She holds a BSc (Hons) in Biology from the University of Manchester, the IMC and the Securities Institute Diploma.