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Pharma dominates global M&A activity

Published on 10/07/15 at 02:05pm
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Mergers and acquisitions in the pharma, medical and biotech sectors have hit the highest levels in nearly 15 years, a new industry report has found.

Figures compiled by industry analysts the Mergermarket group show global mergers and acquisitions in the pharma, medical and biotech sectors hit the highest half-year value on record since the first half of 2001.

The US led the M&A charge, as companies scrambled to buy smaller firms and absorb their pipelines, and link up with rivals to secure greater shares of the market.

US activity across the three sectors hit S$211.2 billion worth of deals, representing a 2.7% increase from the same period last year.

And a separate report by Allen and Overbury found the life sciences is one of a clutch of industries where big-ticket, multi-billion dollar transactions that are highly strategic are becoming more prevalent - and are expected to multiply in the coming years.

Life sciences deals in the first half of 2015 were worth $193 billion, it finds, making it the fourth-highest value M&A sector globally. The report concludes that there remains plenty of life in the sector, with industry consolidation often driving activity.

“Talk of the life sciences bubble being about to burst, after last year’s spate of inversion deals, looks overdone”, it states.

It cites the ‘three-way battle’ between Mylan, Teva and Perrigo for dominance of the generics market - in which each company is refusing to yield any ground after takeover bids by Teva for Mylan and in turn for Perrigo - as a case in point.

The bitter row has seen Teva take on a financial status in the Netherlands with limited liability but no members or share capital.

“To outsmart Teva, US-based, but dutch-registered, Mylan has bolstered its defences with a “Stichting” – a [legal] mechanism commonly used in the Netherlands.

“Whether it will work or not, or whether Mylan will have to depend on winning the Perrigo battle and thus make itself too big, or too highly leveraged, for Teva to swallow, remains to be seen.”

The report also sites pharma firms that have snapped up specialist companies in the pursuit of high value, high margin products, often for rare diseases - including Alexion’s takeover of Synageva and GSK’s collaboration with gene therapy research firm MolMed - as “further evidence of the extraordinary returns that companies can command.… at the premium end of the market.”

Lilian Anekwe

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