Deal values for the pharma sector in the first quarter of 2009 have significantly outperformed the entire fiscal 2008, with a total value of USD166bn compared to USD14.7bn for Q1 2008 a
Deal values for the pharma sector in the first quarter of 2009 have significantly outperformed the entire fiscal 2008, with a total value of USD166bn compared to USD14.7bn for Q1 2008 and USD114bn for the whole year, according to mergermarket.
The firm says companies are trying to increase their revenue generation through acquisitions. Biotech companies are also focusing on acquiring products in various stages of development which will be able to hit the market in the near future.
The overall deal count has decreased by 23.7 per cent from the previous quarter, and by 45.4 per cent from Q1 2008; an anticipated trend in the time of consolidation.
2009 began with three mega-deals in the life sciences and healthcare sector. Pfizer acquired Wyeth for a total consideration of USD64bn; Roche Holding acquired the remaining 44.1 per cent stake in Genentech that it did not already own, a deal size that amassed USD47bn; and Merck spent USD43bn to acquire Schering-Plough.
mergermarket says some insiders do not see more life sciences and healthcare mega-deals on the horizon. They believe that it would simply be difficult to top valuations of the transactions announced during the first quarter of 2009. In addition, a number of the big pharma players, like pharmaceutical giant GlaxoSmithKline, have expressed a lack of interest in making big acquisitions, while
Sanofi Aventis has been sticking to smaller-scale deals recently, including Medley S/A Industria Farmaceutica and BiPar Sciences.
However, it says this does not mean that in 2009 M&A activity in the sector will experience a decrease. Pharma companies are trying to find ways to grow as they gear for looming patent expirations that threaten their current growth.
Mid-market transactions and deals valued below USD5bn may be the next lucrative M&A area in the life sciences and healthcare sector, according to mergermarket. Stiefel Laboratories, the private US-based dermatology pharmaceutical company, is using the advisory arm of Blackstone Group to advise it as the company explores sales options. Johnson & Johnson, the listed US-based manufacturer of healthcare products, has expressed interest in the company, which has an estimated price tag of USD3bn to USD4bn.
Bristol-Myers Squibb, the listed US-based biopharmaceutical company, reportedly has a healthy cash position and is strategically looking to make a number of small acquisitions in 2009, in what it calls a ‘string of pearls’ acquisition strategy.
M&A activity in the stem cell arena may also kick off in the following quarters of 2009. President Obama has signed an executive order allowing federal taxpayer dollars to fund embryonic stem cell research. International Stem Cells Corporation, the listed US based early-stage stem cell therapeutics company, is viewed as a potential target by a number of large pharmaceutical companies.
Venture capitalists are also likely to invest in the space joining the larger Pharma companies interested in boosting their stem cell research efforts.
