In the first half of this year, the value of the top 10 deals completed and/or announced in the international biopharmaceutical sector has exceeded $250 billion, representing a 47% increase over the total value of $170.2 billion for the top 10 M&A transactions in the first half of 2018.
A key factor driving the current wave of biopharmaceutical R&D is the declining return on investment (ROI) for internal research and development. In December 2018, Deloitte Health released a report concluding that the ROI in 2018 was 1.1%, a significant decrease from 3.9% in 2017 and 10.1% in 2010. This reflects the rising average cost of developing new therapies and obtaining market approval. The decline in ROI has led to the loss of exclusivity for marketed products, forcing pharmaceutical companies to expand their portfolios and supplement their pipelines through mergers and acquisitions (M&A). The M&A market was quite strong in the first half of this year, with the top 10 deals all exceeding $1 billion. The details of these transactions are as follows:
1. BMS Acquires Celgene for $74 Billion
On January 3, 2019, Bristol-Myers Squibb (BMS) announced its acquisition of Celgene for $74 billion. On June 24, 2019, BMS stated that it would agree to divest Celgene’s blockbuster psoriasis drug, Otezla, in response to antitrust challenges from the Federal Trade Commission (FTC). In light of this, the transaction is now expected to be completed by late 2019 or early 2020, rather than in the third quarter of this year.
2. AbbVie Acquires Allergan for $63 Billion
June 25, 2019: AbbVie announced the acquisition of Allergan for $63 billion. This transaction will create a biopharmaceutical giant valued at $480 billion, with the acquisition expected to be completed in early 2020.
3. Takeda Acquires Shire for $58.6 Billion
On January 7, 2019, Takeda completed the acquisition of Shire for $58.6 billion. Takeda stated that this acquisition accelerated the company’s “transformation journey” and expanded its capacity to provide highly innovative medicines to patients worldwide. On January 28, three weeks after the completion of the acquisition, Takeda announced the divestiture of non-core assets to alleviate the $50.3 billion in debt incurred from acquiring Shire. In May this year, Takeda planned to increase its annual cost reductions to $2 billion by 2021.
4. GE BioPharma Acquired by Danaher for $21.4 Billion
On February 25, 2019, GE announced that it would be acquired by Danaher for $21.4 billion, aiming to enhance Danaher’s high level of innovation and provide a strong complement to its workflow solutions. The transaction was expected to close in the fourth quarter of 2019.
5. Pfizer Acquires Array for $11.4 Billion
On June 17, 2019, Pfizer announced its acquisition of Array BioPharma for $11.4 billion. Pfizer stated that the acquisition strengthens its innovative biopharmaceutical business, particularly highlighting the significant development potential of encorafenib, an oral small-molecule BRAF kinase inhibitor. Furthermore, Array’s pipeline includes numerous promising targeted therapies in late-stage development.
6. Eli Lilly Acquires Loxo Oncology for $8 Billion
On January 7, 2019, Eli Lilly and Company announced the acquisition of Loxo Oncology for approximately $8 billion, aiming to accelerate the development of anticancer drugs and establish itself as a leading precision oncology company.
7. GSK Acquires Tesaro for $5.1 Billion
On January 22, 2019, GSK completed the acquisition of Tesaro for approximately $5.1 billion. The core product is Zejula (niraparib), an oral poly(ADP-ribose) polymerase (PARP) inhibitor, and the portfolio also includes oncology drugs targeting PD-1, TIM-3, and LAG-3.
8. Roche Acquires Spark for $4.8 Billion
On February 25, 2019, Roche announced its acquisition of Spark for $4.8 billion; however, the deal faced numerous setbacks, with the closing timeline repeatedly extended due to issues with the U.S. Federal Trade Commission (FTC). On June 7, Roche acknowledged that only 21.1% of Spark’s outstanding shares had been validly tendered and accepted, whereas at least 50% of Spark’s shares were required to complete the transaction.
9. Merck Sharp & Dohme Acquires Peloton Therapeutics for $2.2 Billion
On May 21, 2019, Merck & Co., Inc. announced the acquisition of Peloton Therapeutics for $2.2 billion, a move that will strengthen Merck’s oncology R&D pipeline. The transaction includes an upfront cash payment of $1.05 billion and $1.15 billion in regulatory and sales milestone payments. The acquisition is expected to be completed in the third quarter of this year.
10. Thermo Fisher Scientific Acquires Brammer Bio for $1.7 Billion
On March 24, 2019, Thermo Fisher Scientific announced the acquisition of Brammer Bio for $1.7 billion, a move that expanded its gene therapy business in the area of viral vector contract development and manufacturing organization (CDMO). The acquisition was completed on May 1, 2019.
References:
Top 10 M&A Deals of January–June 2019