M&A Will Continue to Be a Mainstay for Growth in the Pharma Industry

For the past five years, there have been more than 400 mergers and acquisitions with companies in the gene therapy, immuno-oncology, microbiome and orphan drugs therapeutic space in North America and that trend is likely to continue, according to a new analysis.
In its Deal-Making Trends in Pharma analysis, GlobalData’s research shows that in North America, the pharmaceutical industry saw twice the number of M&S activity that the European market saw. When compared to the Asian-Pacific (APAC) market, the U.S. market had seven times the number of M&A deals. Europe had three times as many acquisitions than APAC, GlobalData said.
From 2014 to the first half of 2019, there were 2,882 deals that fell within the gene therapy, immuno-oncology, microbiome and orphan drug space. These deals were worth more than $1 trillion, according to GlobalData. During this time frame, the largest deal types were in the immuno-oncology space with 270 deals in 2018 alone, GlobalData said. That represents a growth of 63% since 2014. Gene therapy showed similar growth of 62% with 133 deals in 2018 compared to 82 deals in 2014.
Jesus Cuaron, associate director of Cardiovascular and Metabolic Disease and Gender Health Pharma at GlobalData, said North America is not only the top region for mergers and acquisitions, but also across each therapeutic theme.
“Acquisitions revolving around immuno-oncology assets were the most prominent across the three geographic regions, while acquisitions of microbiome therapies remained low across the board. In the APAC region, no acquisitions were made that involved significant microbiome assets,” Cuaron said in a statement.
While many of the M&A deals were on the small side, there have been a number of mega-mergers over the past few years. Among those are Takeda’s $60 billion acquisition of Shire; Bristol-Myers Squibb’s $74 billion deal for Celgene; and AbbVie’s $63 billion plan to acquire Allergan. Other notable deals include Novartis’ $8 billion deal for gene therapy company AveXis and Roche’s $4.8 billion bid for Spark Therapeutics. Other mergers and acquisitions over the past few years can be found here.
Pointing to the mega-deals like BMS’ bid for Celgene, Cuaron said large-value deals are becoming more common, which signals a “new strategy in which stakeholders capitalize on the strengths of other companies.” These large-value deals are game-changers for the pharmaceutical industry, Cuaron said, and will cause a “ripple of activity” within the top pharmaceutical companies.
According to its latest analysis, GlobalData said it anticipates the pharmaceutical industry will continue to be attractive for high volumes of deal activity in the future. That prediction, the analyst said, is based on the fact that the pharmaceutical industry has a track record of “making deals with companies that focus on highly specialized biologics and other high-value therapies.”
Looking at the potential future of M&A activity, Cuaron said companies are looking to boost their pipelines with more innovative assets and technologies. While licensing agreements are less expensive routes for companies to take to gain an asset, Cuaron said acquisitions are more desirable for most companies because those deals allow the acquiring company to gain complete control over the assets of interest. Cuaron noted that pharmaceutical companies that have few revenue drivers or face patent expiration or generic competition, will be the ones to more quickly flex their M&A muscle. For example, AbbVie has significantly benefited from Humira, which last year generated nearly $30 billion in revenue. However, Humira is facing a patent cliff in 2023 and was seeking a “transformational move” when it made the bid for Botox-maker Allergan.
At the time Allergan struck the deal, AbbVie said: “Smaller bolt-on acquisitions provide opportunities for future growth, but also require significant R&D investment amid scientific and clinical uncertainty. This transaction offers immediate compelling financial and strategic value to our shareholders with a much lower risk profile,” which echoes what Cuaron said.
https://www.biospace.com/article/big-m-and-a-deals-will-likely-continue-analyst-predicts/