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Life Sciences M&A Sees Fewer Billion Dollar Deals

Average therapeutic deal values fall but premiums for biotech rise.


The Burrill Report

“In terms of premiums, biotech and diagnostics are much more prized than specialty pharmaceuticals.”

Global life sciences M&A transactions fell more than 30 percent in 2012, a notable year for the low volume of multi-billion dollar deals. In fact, Nestle’s $11.8 billion acquisition of Pfizer’s infant nutrition business was the only transaction greater than $10 billion.

Overall, life sciences M&A transactions totaled $109.4 billion globally in 2012, a 31 percent drop compared to 2011. In 2011, major transactions included Sanofi’s $20.1 billion acquisition of Genzyme, Johnson & Johnson $21.6 billion Synthes, Takeda’s $13.7 billion acquisition of Nycomed, and Gilead Sciences’ $11 billion purchase of Pharmasset.

Big Pharma continued to be the main acquirer of innovative therapeutics, but the deals in 2012 were smaller than 2011. Among the top deals of 2012 was Bristol-Myers Squibb’s $7 billion acquisition of Amylin Pharmaceuticals, which gave it a complementary diabetes franchise.

GlaxoSmithKline’s $3 billion acquisition of partner Human Genome Sciences was also among the more notable transactions. The deal gave GSK full control of lupus drug Benlysta and other promising compounds.

Other deals of note include Bristol-Myers Squibb’s $2.5 billion purchase of Inhibitex for its Hepatitis C investigational drug that later failed in a clinical study, AstraZeneca’s acquisition of Ardea Biosciences for $1.3 billion for its gout drug and Amgen’s $1.2 billion acquisition of Micromet for its BiTE technology platform and pipeline.

The average deal value for therapeutic M&A deals in 2012 with disclosed deal values above $20 million was $638 million, a 36.4 percent drop compared to the $1 billion average deal value in 2011. The number of deals, however, was up 22.4 percent in 2012 compared to 2011. While M&A deal volume grew in 2012 compared to 2011, average deal values fell 36.4 percent from the previous year.

In looking at the types of premiums life sciences M&A deals are attracting, biotech and diagnostics are much more prized than specialty pharmaceuticals. Median biotech premiums are at about 42 percent while diagnostics premiums are 27 percent, rising in lock step as companies seek novel targeted therapeutics that benefit specific populations identified by diagnostics. Diagnostics are especially important in advancing clinical development of many targeted new medicines in the pipeline.


January 04, 2013

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