Big-ticket deals drive pharma M&A | White & Case LLP International Law Firm, Global Law Practice
Big-ticket deals drive pharma M&A

Big-ticket deals drive pharma M&A

Activity in the sector is fueled by the need to refill product pipelines and navigate convergence between health and tech firms

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The pharma, medical and biotech sector delivered 247 deals worth US$65.4 billion in the first half of 2018, with deal value down by 31 percent year-on-year.

 

Top pharma & healthcare deals
H1 2018

1: Sanofi SA bought Bioverativ Inc. for US$11.1 billion

2: Kohlberg Kravis Roberts & Co. agreed to buy Envision Healthcare Corporation for US$9.4 billion

3: Celgene Corporation bought a 90.37% stake in Juno Therapeutics Inc. for US$8.2 billion

    
     

Big pharma, big deals

Despite the downturn in overall deal value, the sector continues to deliver large, industry-shifting transactions, such as Sanofi's US$11.1 billion acquisition of Bioverativ—its largest deal in seven years—and KKR's US$9.4 billion announced acquisition of Envision Healthcare. These were two of the largest transactions in the sector in the US in the first half of 2018.

 

US$65.4 billion
The value of 247 deals targeting the US pharma sector in H1 2018

 

Building pipelines, expanding horizons

As in previous years, M&A in the sector has been driven by the need for large pharma groups to refill their product pipelines as blockbuster drugs go off patent and move into new treatment areas.

Sanofi's purchase of Bioverativ, a maker of hemophilia medicines, for example, boosts the French drug company's position in the treatment of rare diseases. Celgene's US$8.2 billion acquisition of a 90 percent stake in Juno Therapeutics, a developer of blood cancer drugs, which is close to having a treatment for lymphoma cleared by regulators in 2019, was underpinned by a similar rationale. Celgene's best-selling medicine Revlimid loses patent protection in 2022, making the Juno acquisition a key strategic investment for the group. In the case of the Novartis purchase of AveXis, a gene therapy treatment developer, the deal moves Novartis into a new and fast-growing area.

 

31%
Percentage decrease in deal value compared to H1 2017

 

Connected health

As in other sectors, pharma M&A has been influenced by the trend toward convergence with the technology sector. Swiss pharmaceuticals group Roche, for example, paid US$1.9 billion for a stake in health-tech company Flatiron Health, with a view to speeding up research by using Flatiron's software and data analytics.

Large pharma companies are cash-rich and enjoy strong credit ratings. They will continue acquiring smaller biotech companies in order to renew pipelines and keep pace with the development of new treatments. As a consequence, M&A in the sector is expected to accelerate into the second half of the year.

 

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Navigating change: US M&A H1 2018

 

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