Defying gravity: US M&A H1 2019

Pharma chases innovation through deals

The need to replenish intellectual property has pushed the pharma industry to the highest-performing sector by M&A value

Explore the data

Create custom charts using the latest data on global M&A

In the pharmaceuticals, medical and biotech sector, deal value in the first half of the year was up 142 percent to US$172 billion—making it the best-performing sector in terms of value in H1. But volume was down 11 percent to 282 transactions. Much of this increase in value can be attributed to Bristol-Myers Squibb's purchase of Celgene, one of the largest-ever deals in the sector.

The blockbuster US$89.5 billion Celgene deal is indicative of the market. Big pharma is competing fiercely in areas such as immuno-oncology, where breakthrough drugs are now transforming patient outcomes. These treatments have the added attraction of being more difficult for generics firms to replicate when they move off-patent.

It is notable that the third-biggest deal of the year so far, though much smaller, took place in the same segment of the market. Pfizer’s US$10.7 billion purchase of Array BioPharma will broaden its cancer drugs offering and strengthen its biopharma business.

Elsewhere in the industry, consumer health remains an interesting segment, with a number of large pharmaceutical companies divesting their businesses in this area of the market. Such deals reflect a desire to focus on the core business, particularly in the face of scrutiny from activist investors urging companies to concentrate their efforts where the most value is being generated.

Looking forward, there is now scope for increased M&A activity among firms seeking technological innovation. One area of interest, for example, is the increasing use of technology to improve decision-making during the clinical trials process. Enhanced use of technology will continue to be an important theme throughout the sector.

Another possibility is further M&A activity at a more strategic level, including deals designed around the principle of vertical integration as businesses seek to stay ahead of the market. Transactions that combine both retailer and payer, for example, provide clear opportunities.

Potential headwinds include increased political volatility, uncertainty around healthcare reform and the prospect of regulatory change, together with any notable deterioration in the broader economy.

Top pharma & healthcare deals
H1 2019

1: Bristol-Myers Squibb bought Celgene for US$89.5 billion

2: Danaher Corporation bought GE Healthcare Life Sciences for US$21.4 billion

3: Pfizer Inc. bought Array BioPharma, Inc. for US$10.7 billion



Click here to read the full magazine
Defying gravity: US M&A H1 2019



This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2019 White & Case LLP