Between Pfizer and AstraZeneca deal rumors followed by a strategic portfolio exchange by GlaxoSmithKline and Novartis and an offer for Allergan this week, it feels like a deal frenzy is underway. When you look at the numbers from the first quarter, it seems a little like 2008-2009 when megadeals led to significant consolidation in the life science industry. But one big difference, maybe with the exception of Pfizer, is the deals are more targeted.
Pharma deal flow in the first quarter amounted to $12.4 billion, according to MergerMarket — the most active start to the year since the first quarter of 2009. Even more telling, global pharma deals valued at $49.4 billion are already 43.2 percent higher than the value of the entire first half of last year ($34.5 billion).
With AstraZeneca, the object of Pfizer’s affections is its cancer immunotherapy drug portfolio because it’s an exciting area for pharma companies with lots of potential for more effective, targeted therapies. At the same time, these drugs are generally in the early stages of development. The Sunday Times reported Pfizer’s bid for AstraZeneaca at $60 billion, referencing investment bankers as sources of that info.
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In an interview, Olga Oksman, a reporter at DealReporter, said big pharma wants to be more nimble. Johnson & Johnson sold its clinical diagnostics business to Carlyle for more than $4 billion at the start of the year. It’s also been scaling back its consumer products business.
Merck is also interested in shedding its consumer and animal health businesses as part of a process of exploring strategic options for its business.
Oksman also observed that companies are keen to acquire de-risked assets, particularly with an eye to orphan drugs and specialty drugs that can generate more revenue. Growth by acquisition is a strategy adopted by both Valeant Pharmaceuticals and Endo Health Solutions and it has generally worked well for them.
