M&A in the biotechnology and pharmaceutical industries is shaping up to rebound in 2011, a new report indicates, given momentum by deals such as the $20.1 billion biotech buyout of Genzyme Corp. by French pharmaceutical giant Sanofi-Aventis SA in February and the $13.7 billion purchase of private equity-backed Nycomed International Management GmbH by Takeda Pharmaceutical Co. Ltd. in May.
During the first half of 2011, there were 31 biotech and pharma deals worth a transaction value of $51.6 billion, according to a report released Monday, Aug. 15, by Zug, Switzerland-based HBM Partners AG. Of those, 18 deals were worth more than $200 million. Conversely, only 26 deals were made during the first half of 2010; the transaction value of biotech and pharma deals during all of 2010 totaled only $67 billion.
If the upward swing continues during the second half of the year, 2011 could have the most biotech and pharma deals since before the recession, the report shows. That, however, is dependent on what happens in the financial markets, HBM noted.
"Even though several important M&A transactions were announced in July, it is difficult to provide an outlook on biopharma M&A due to the recent turbulences on the financial markets. If biotech stocks fall further, some public companies could become attractive takeover targets," wrote the authors, Ulrich Geilinger, Chandra Leo and Thomas Heimann. "For venture and private equity investors, trade sales will remain the preferred and possibly the only exit route for the next 6 to 12 months. Cash-strapped companies with ongoing clinical development programs will thus face a buyers' market."
Venture capital and private equity firms had their best half-year for exits in years, according to the HBM report, even when the $13.7 billion Nycomed purchase isn't included. The remaining 20 privately backed deals worth $5.2 billion in total value (both up-front and milestone payments) represented the largest dollar total in several years. Other private deals include Ireland-based Shire plc's $750 million buyout of Advanced BioHealing Inc. of Westport, Conn., and Japan-based Daiichi Sankyo Co. Ltd.'s purchase of Berkeley, Calif.-based Plexxikon Inc. for $875 million.
Sanofi has been the most consistent pharma or biotech dealmaker, having made five acquisitions between the beginning of 2010 and the completion of the report. Valeant Pharmaceuticals International Inc. of Mississauga, Ontario, is second with three acquisitions.
Though 2011 may account for the most deals in years, it's unlikely that it will surpass 2009 in terms of transaction value. The $177.1 billion spent in 2009 made it a landmark year for biotech and pharma dealmaking, thanks to blockbuster deals such as Pfizer Inc.'s $68 billion purchase of Wyeth, Roche Holding AG's buyout of Genentech Inc. for $46.8 billion and Merck & Co.'s $41 billion acquisition of rival Schering-Plough Corp.
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