Life sciences M&A activity – and buzz – has hit a fever pitch in the past few months. As the industry braces itself for biosimilars to hit it big and precision medicine to drive development in targeted therapy, even more acquisitions are on the horizon.
BioPharma Dive has compiled a tantalizing list of some potential acquisitions:
1. Merck and Jazz Pharmaceuticals
Jazz Pharma has long been a hot prospect for acquisition, and would be a synergistic fit with Merck. Jazz’s hottest product, the near-blockbuster narcolepsy drug Xyrem, and its oncology and psychiatry franchises are a good fit for Merck’s product portfolio as it plays in all these spaces. While Merck’s current top sellers are in categories like diabetes and STI management, a Jazz buyout could help flesh out Merck’s cancer (Keytruda) and sleep offerings.
The biggest reason why such an intuitive deal might be a bust? Because it hasn’t already happened.
“You have to wonder, why would that buy happen now?” Evaluate Group analyst Jacob Plieth asked. “Why wouldn’t it have happened at any other point given those synergies with Merck… You must have thought that Merck would at least have considered them already and turned them down.”
2. Gilead and Seattle Genetics
Hep C drug Sovaldi has landed Gilead with a boatload of cash – so what’s next? It’s proven to be weak in the oncology space – Zydelig continues to struggle against competitors like AbbVie’s Imbruvica – so this would be a prime time to bulk up in that arena. Seattle Genetics has been on a roll, with 11 new approvals for its cancer drug Adcetris between October 2013 and October 2014. It’s a strong drug – and wealthy Gilead needs a new hero.
However, Bristol-Myers Squibb is already testing out Adcetris with its own heavyhitter, Opdivo. If the two are complementary, it might be counterintuitive to get absorbed by Merck instead.
3. Pfizer and Celgene
That Pfizer-AstraZeneca $116 billion hostile takeover from last year didn’t take, but Pfizer may still be on the prowl for another megadeal – and Celgene would be a prime target, thanks largely to its impressive blood cancer drug pipeline. Pfizer, too, has a lackluster cancer franchise – it’s dominated instead by Roche. It has to play catch-up.
“Pfizer probably is aware that it needs to do something in oncology,” Plieth told BioPharma Dive. “Oncology is an area that’s so hot at the moment, and Pfizer definitely is lagging. It even lags AstraZeneca, it clearly lags companies like [Bristol-Myers Squibb], and it’s let a couple of what now look like promising oncology assets go.”
However, Pfizer’s recent Hospira deal might be reason enough to chill with the large acquisitions for a time. Furthermore, Celgene’s super expensive – its market cap is around $96 billion. If you tack a 30 percent premium on that, this would be a $125 billion deal – and is Pfizer ready to pony up that kind of cash? Maybe not.
4. Shire and BioMarin
Given the fact that they’re close to the same size, however, this will be more merger than acquisition. BioPharma Deal‘s thoughts on this one:
Shire wants to become the rare disease drug maker and has shown it’s willing to spend cash to do it. BioMarin is a strong orphan drug firm with a promising pipeline, including its Duchenne muscular dystrophy candidate. That, in a nutshell, is the impetus for a such a deal.
But why would BioMarin want to be acquired? This one’s a bit more dubious.
So what’s the rationale for all this M&A activity? BioPharma Dive explains:
Smaller fish are of course looking for acquisition – otherwise, it’s only a matter of time before funding runs dry. And for larger pharma, an inability to acquire assets could be an indication of incompetence.
“I think everyone realizes that you just have to do deals,” Evaluate Group analyst Jacob Plieth told BioPharma Dive. “If you see an asset, you’ve just got to do it, you’ve just got to outbid everyone else and buy it.”
Biosimilars are playing a critical role here, Avalere Health CEO Dan Mendelson told BioPharma Dive. Branded big pharma is diversifying into biosimilars in advance of them proliferating across the market in the next few years. Obama’s precision medicine play is driving interest in molecular diagnostics. Lastly, companies like Gilead are flush with cash.
“And when you’re sitting on billions of dollars of cash,” Mendelson said,” you’re usually going to deploy that for acquisitions.” Otherwise, shareholders will expect that money returned.
[Image courtesy of Big Stock.]
