Data for the this analysis was compiled using the DealForma database on deals. We applied initial filters for mergers and acquisitions, target company types, therapeutic areas, company stage at acquisition, and deal payment terms. From there, we exported the data to Excel and used pivot tables and charts to do the rest. All data are based on publicly disclosed figures. We invite you to answer interesting questions on M&A and partnership trends using our data and carefully curated profiles on deals, pipelines, companies, funding, and business executives by visiting dealforma.com to schedule your personalized demo.
Life Sciences M&A started with a bang in 2019 with one of the biggest deals to date – Bristol-Myers Squibb will acquire Celgene in a $74 billion cash and stock transaction that represents a 54 percent premium to Celgene’s closing price ahead of the announcement (see DealForma’s synopsis below). The deal joins two powerhouse oncology companies and comes as Celgene has seen its market cap drop more than $60 billion over the past year and a half.
It is more than likely to be the talk of the town at the annual dealmaking J.P. Morgan Healthcare Conference, and there will be much speculation over whether 2019 will follow 2018 as a good year for life sciences M&A. Several catalysts that have spurred recent transactions – a strong venture capital and private equity investment climate, large fundraisings, an emphasis on innovation, and continued pharma restructuring around core businesses – are expected to continue in the new year.
We mined DealForma’s extensive database for historical M&A trends to get an idea of what might lie ahead. After two quiet years, M&A deals of biopharma therapeutics and platforms, diagnostics, and medical device companies surged more than 50 percent in 2018 to 154 deals valued at $148 billion in disclosed deal values.
Last year also started off with a bang with $33.9 billion in announced M&A deals in January alone. Among the largest deals, Celgene acquired privately-held Impact Biomedicines during JPM week for $1.1 billion cash up front for its late-stage myelofibrosis drug fedratinib and up to another $5.9 billion based on achievement of various milestones. Celgene followed that deal with the buyout of Juno Therapeutics for $9 billion for its immunotherapies in mid-stage development. And Sanofi acquired Biogen’s late-stage gene therapy spinout Bioverativ for $11.6 billion.
Then in May 2018, Japanese pharmaceutical Takeda said it would acquire rare disease specialist Shire plc for $62 billion.
Early-Stage Company Acquisitions
Though all of these acquisitions involved companies with later stage and marketed therapies, the trend for life sciences M&A has moved towards earlier-stage company acquisitions since 2011. In 2018, 30 percent of acquired companies were preclinical, discovery-stage, and platforms; 50 percent had a compound in the clinic, and 20 percent had an approved product.
Genentech’s acquisition of Jecure Therapeutics, Roche’s buyout of Inception5, Janssen Biotech’s deal for BeneVir Biopharm, and Astellas Pharma’s acquisition of Potenza Therapeutics were among the transactions announced in 2018 for public and private companies at the earliest stages of development.
While financials were not disclosed for many of the early-stage deals, analysis of private and public biopharma company deal values finds that averages rose to $471 million for private companies at the preclinical stage, increasing 133 percent above the average value in 2017.
Overall average deal values for private company acquisitions rose to $845 million in 2018, a 217 percent jump over 2017 values.
Public M&A Premiums
For public companies, premiums have been increasing steadily over the past ten years, with infectious disease therapeutics developers’ share premiums at the top as far as what acquirers are willing to pay. Oncology companies, always in demand, came in second.
Top M&A Buyers
As the distinction between pharma and biotech continues to blur, most of the top buyers in 2018 continue to be large pharmaceutical companies looking for innovation outside their organizations. But several biotechs, including Celgene, Alexion, and Emergent BioSolutions also made the list last year.
It will be interesting to see how 2019 progresses as one of the largest biotechs gets swallowed up. More than $20 billion flowed into private health-related life sciences companies in 2018, including many large launch/Series A rounds, and it shows no signs of slowing down. In the public sector, however, biotechnology company share prices are down almost 25 percent since their high in August, so it might be the perfect time to snatch up a public company.