It looks like the biopharmaceutical shopping spree to acquire assets has eased off. The number of completed mergers and acquisitions in the biopharma industry disclosing financial details, recorded by BioWorld Snapshots, in the first half of this year was 31, which was 35 percent below the number of M&As completed for the same period last year. Total deal value was approximately $60.5 billion, less than half of the $158 billion total deal value in the same period of 2015.
Boosting the totals last year were 15 multibillion-dollar deals. This year, we have so far only seen six such deals. In fact just one, in terms of size, represented more than 50 percent of the M&A deal total in 2016. That was the $32 billion takeover of Baxalta Inc. by Shire plc. (See BioWorld Today, Jan. 12, 2016.)
Among the $1 billion-plus transactions was Jazz Pharmaceuticals plc's $1.5 billion buyout of Celator Pharmaceuticals Inc., which adds Vyxeos, a liposomal form of cytarabine and daunorubicin, for high-risk (secondary) acute myeloid leukemia to the product portfolio. A new drug application for breakthrough-designated, fast-tracked Vyxeos is expected in the next quarter, with marketing authorization in Europe to be sought in 2017. (See BioWorld Today, June 1, 2016.)
The slowdown in M&A activity has not only been felt in the biopharmaceuticals sector of the health care industry. Mergermarket, in its own just-released Global Pharma, Medical & Biotech (PMB) trend report for the first half of this year, finds that PMB experienced a decline in M&A activity of 10.2 percent by value compared to the same period in 2015 ($182.4 billion, 716 deals). So far the PMB sector recorded a total deal value of $163.8 billion across 631 deals, and accounted for 12.3 percent of global M&A value.
Regionally, the report showed that U.S.-based PMB activity, which accounted for 66.8 percent of global PMB value, with 241 deals worth $109.3 billion, experienced a noticeable slowdown in the first half of the year, falling 23.6 percent compared to $143 billion from 287 deals in the same period last year. The top two U.S. transactions involved the Shire/Baxalta deal and the Abbott Labs $29.9 billion bid for St. Jude Medical.
The Asia-Pacific region accounted for only 6.5 percent of total PMB value globally, with 110 deals valued at $10.6 billion.
Dip in Valuation
What could entice companies to consider pulling the trigger on more M&A transactions in the second half of this year is the fact that they won't have to pay as much to acquire potential attractive acquisition targets as they did last year. According to BioWorld Snapshots, the universe of 324 biopharma companies had a combined market cap total $925 billion last year at this time. That total has fallen 18 percent to a market cap of $760 billion, but the number of public biopharma companies has climbed to 363 as a result of vibrant biotech IPO activity.
It has been a popular exercise these days for analysts and investors alike to speculate on the large biotechs that could be likely candidates for a takeout.
It is interesting to note that the top 20 biotech companies have collectively seen their market cap valuations dip by a whopping 28 percent in the past 12 months. That factor alone may have pinned a "for sale" sign on some of those companies.
We know that Medivation Inc. is in play after Sanofi SA's original hostile $9.3 billion bid for the company. That has now evolved into Medivation entering into confidentiality agreements with a number of parties, who wish to buy the firm. Including Sanofi, Pfizer Inc. and Celgene Corp. have also expressed interest in acquiring the company, according to Reuters. (See BioWorld Today, July 8, 2016.)
Those companies, along with the likes of Gilead Sciences Inc., have plenty of cash to spend and will be looking to pull the trigger on a major acquisition if the deal is the right fit for them.
Certainly in these days of depressed valuations the "price is right."