Focus on Biotech M&A

M&A in the Biotech sector rose by 25 per cent in the third quarter of 2016 compared to the two previous quarters, but is still down in activity seen in 2015. This activity was driven by small and medium deals but also the biggest deal of the year so far; German drug manufacturer Bayer’s takeover of the US agricultural seed producer, Monsanto, for $66 billion.

August was a period of buyer’s remorse, as global diagnostic device and service provider company Alere, filed a lawsuit against its seemingly reluctant prospective purchaser Abbot Laboratories to force the company to continue with its $5.8 billion deal. Alere alleges that Abbot ‘breached the merger agreement…by failing to promptly secure antitrust approvals and other regulatory requirements’ and that the company has overstretched itself by making an earlier purchase of medical implement manufacturer St Jude Medical in April for $25 billion.

No such acrimony was exhibited at the takeover of Sage Products by Stryker Corp for $2.8 billion. Sage manufactures surgical items which reduce hospital-acquired infections such as MRSA thus preventing post-operative complications. Stryker manufactures artificial knees and hips so its acquisition of Sage helps reduce both infections and the threat of lawsuits.

Shire, the Jersey-registered biopharmaceutical company, acquired Baxalta specialists in rare diseases and highly-specialised conditions, in June 2016, for $32 billion. The acquisition looks set to double the annual revenue of Shire by focusing in more detail on its core business as well as protecting it from hostile interest in the future.

What’s next?

Shares in Biogen, a company which specialises in therapies for neurological, autoimmune and rare diseases, rose in early August after rumours that several drug companies were interested in purchasing it. Merck and Allergan were among those mentioned in a possible deal, despite denials from all parties, who said that they do not comment on speculation.

Gilead Sciences, which develops innovative medicines, is also a company surrounded by M&A speculation, with pharmaceutical giant Merck being mentioned in relation to the California-based biopharmaceutical company. Merck is also rumoured to be interested in RNA-targeted drug company; Ionis Pharmaceuticals which has a potential price tag of around $4 billion.

Stay tuned to our blog for more industry specific M&A news and remember to get in touch with our experienced team with any questions you have about the M&A process and how Benchmark International can help you.

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