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A Perspective On Biopharma's Record M&A Run In 2019

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A Perspective On Biopharma's Record M&A Run In 2019

This year was a watershed one for biopharma M&A, with several multibillion-dollar deals announced thus far.

M&A activity in 2019 kickstarted with a big deal. Bristol-Myers Squibb Co (NYSE: BMY) agreed to buy Celgene for $74 billion in cash and stock, and the deal was consummated in late November — although there were several nervous moments en route to regulatory clearance.

Mega Deals, Record Numbers

The number of U.S. pharma and biotech deals grew year-over-year from 365 in 2018 to 484 by early November 2019, with the size of the year's deals being the noteworthy aspect, MarketWatch reported, citing Dealogic.

M&A transaction value in the sector totaled $342 billion — the highest since 1995, when Dealogic began tracking deals.

M&A volume reached $190 billion globally in the first half of 2019, higher than the full-year numbers many of past years, according to data compiled by HBM Partners.

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Source: HBM Partners

Related Link: 12 Biotech Stocks Primed For A Short Squeeze

Key Takeaways

The main motives for biopharma M&A deals are the quest for reinvigorating growth through product innovation, compensating for lost revenue from patent expirations and unlocking synergies.

Apart from mega-sized deals, bolt-on acquisitions of start-ups were also common in 2019.

Merck & Co., Inc. (NYSE: MRK) made the $300-million purchase of Immune Design; the $1.05-billion buy of Peloton Therapeutics just ahead of its planned IPO; the $773 million spent on privately held Tilos Therapeutics; and the recently announced $2.7 billion deal to buy ArQule, Inc. (NASDAQ: ARQL). 

Oncology, specifically immuno-oncology, was another hot therapeutic area that attracted interest, as evidenced by the Celgene deal and Eli Lilly And Co (NYSE: LLY)'s Loxo purchase.

Apart from buyouts, several multibillion-dollar oncology partnerships have also been struck, such as AstraZeneca plc (NYSE: AZN) payment of up to $6.9 billion for DAIICHI SANKYO/S ADR (OTC: DSNKY)'s lead antibody drug conjugate [fam-] trastuzumab deruxtecan, or DS-8201, which is being developed for multiple HER2-expressing cancers.

After Novartis AG (NYSE: NVS)'s 2018 purchase of AveXis, which brough the spinal muscular dystrophy treatment Zolgensma into its stable, the gene therapy deal flow continued in 2019.

Roche Holdings AG Basel ADR (OTC: RHHBY) completed its acquisition of Spark Therapeutics Inc (NASDAQ: ONCE).

ASTELLAS PHARMA/ADR (OTC: ALPMY) recently announced a deal to buy Audentes Therapeutics Inc (NASDAQ: BOLD).

Speculation is rife that many gene therapy names with advanced pipeline candidates could be ripe for buyouts.

Companies specializing in other emerging therapeutic areas such as RNA interference-based therapies were also in the spotlight in 2019. 

Novartis was lured by The Medicines Company (NASDAQ: MDCO)'s lone pipeline asset, inclisiran, which is a small interfering RNA therapeutic candidate that has the potential to lower LDL-C.

Sarepta Therapeutics Inc (NASDAQ: SRPT) entered a licensing deal with Roche for its DMD gene therapy that could net the former up to $2.85 billion.

Notable Deals Of 2019

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