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Who's The Next Big Pharma Acquisition?

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Who's The Next Big Pharma Acquisition?
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In a new report, Jefferies analyst David Steinberg looked at the frenzy of M&A activity that has been happening in the specialty pharmaceuticals space in recent years. According to the report, 2014 was a blockbuster year for buyouts, and 2015 is on pace to be a record year.

Perfect M&A Environment

In the report, analysts explain that the current M&A cycle in pharmaceuticals has been driven by three key environmental factors: cheap debt, tax inversions and the creation of “cash” earnings reporting, which has allowed buyers to report immediate earnings accretion following a transaction.

Related Link: 2 Small Cap Pharma Stocks Credit Suisse Loves

Analysts describe the current M&A cycle, which began in 2005, as “robust,” and the current stage of the cycle particularly strong.

The Numbers

Last year saw 45 pharmaceutical M&A transactions worth $141 billion dollars. While 2014 was the strongest year so far for the current cycle, the 16 deals so far in 2015 totaling $99 billion puts this year well ahead of last year’s pace.

Despite the major momentum, analysts caution that as little as one bad deal could bring the current M&A boom to a screeching halt.

Top Prospects

Jefferies names the following companies as the current top potential pharmaceutical buyout targets.

  • Valeant Pharmaceuticals International Inc (NYSE: VRX)
  • Shire PLC (NASDAQ: SHPG)
  • Perrigo Company Public Limited Co (NYSE: PRGO)
  • Zoetis Inc (NYSE: ZTS)
  • MaLlinckrodt Public Limited Co (NYSE: MNK)
  • Jazz PharMaceuticals Public Limited Co (NASDAQ: JAZZ)
  • United Therapeutics Corp (NASDAQ: UTHR)
  • Pacira Pharmaceuticals Inc (NASDAQ: PCRX)
  • Insys Therapeutics Inc (NASDAQ: INSY)
  • The Medicines Co (NASDAQ: MDCO)
  • DepoMed Inc (NASDAQ: DEPO)
  • Spectrum Pharmaceuticals Inc (NASDAQ: SPPI)
  • Kythera Biopharmaceuticals Inc (NASDAQ: KYTH)
  • Revance Therapeutics Inc (NASDAQ: RVNC)
  • Xenoport Inc (NASDAQ: XNPT)
  • Mylan NV (NASDAQ: MYL)
  • Akorn Inc (NASDAQ: AKRX)
  • Impax Laboratories Inc (NASDAQ: IPXL)
  • Amphastar Pharmaceuticals Inc (NASDAQ: AMPH)
  • Anacor Pharmaceuticals Inc (NASDAQ: ANAC)

Latest Ratings for VRX

DateFirmActionFromTo
Dec 2016Morgan StanleyDowngradesOverweightEqual-Weight
Nov 2016MizuhoDowngradesNeutralUnderperform
Nov 2016Morgan StanleyMaintainsOverweight

View More Analyst Ratings for VRX
View the Latest Analyst Ratings

Posted-In: David SteinbergAnalyst Color Biotech Long Ideas M&A Analyst Ratings Trading Ideas General Best of Benzinga

 

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