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Analysis

Pharmaceutical Deals Completed in 3Q16

Wed, 09/06/2017 - 10:20

M&A activity in the pharmaceutical sector has continued over the past year, despite global fears of a slowdown due to US elections. The combined value of deals over US$1 billion in 3Q16-2Q17 topped that of the previous year. 

Global M&A activity in the pharmaceuticals sector has been slow in the first months of 2017 and the second half of 2016, according to FiercePharma. Although many experts predicted a pick-up in M&A activity in 2017, FiercePharma reports that this is yet to materialize. Only 12 deals surpassed the US$1 billion mark in the year from 3Q16 through 2Q17, compared with 16 in the same period a year earlier. But the combined value totaled US$138.7 billion, surpassing the US$120.3 value of the deals negotiated in 3Q15 through 2Q16.

There were two large deals completed that together account for just over 50 percent of the value of all deals over US$1 billion, the largest of which went through in August 2016 when Teva Pharmaceuticals acquired Actavis. “Through our acquisition of Actavis Generics, we are creating a new Teva with a strong foundation, significantly enhanced financial profile and more diversified revenue sources and profit streams backed by strong product development engines. This is a platform that is expected to generate multi-year top-line and bottom-line growth as well as significant cash flow,” said Erez Vigodman, President and CEO of Teva in a press release.

A second deal also hit the US$30 billion mark when Johnson & Johnson completed the acquisition of Actelion in June 2017. In a company press release, J&J announced that it expected the deal to provide value to Actelion shareholders, extend the geographical and commercial reach of its products while also enhancing value for Johnson & Johnson shareholders. It will be spun off into an R&D unit based in Switzerland that “will have a broad portfolio of drug candidates in clinical development across four focused therapeutic franchises: specialty cardiovascular disorders, central nervous system disorders, immunological disorders and orphan diseases,” the company said in its release.

KPMG reports that oncology is a particular area of interest for companies within the biotech sector and it expects three of the top five selling drugs in 2017 to belong to the sector. EvaluatePharma reports that oncology was the top-grossing therapeutic area in 2016 with global sales of US$93.7 billion.

In addition to the big names and deals, investment in younger companies in life sciences continued, with the top 10 venture capital rounds in 2016 reaching a combined value of US$1.9 billion. One of the most notable is BlueRock Therapeutics’ Series A Round, which raised US$225 million in December 2016 from investors Bayer and Versant Ventures, a biotechnology investment firm. BlueRock Therapeutics will initially focus on pluripotent stem-cell treatments.

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