Deal Values Of Mergers & Acquisitions Decline 39% In Q4 2011

Tuesday 6 March 2012, Amsterdam

The report provides detailed information on partnerships, licensing agreements, M&As, equity/debt offerings, private equity and venture financing transactions registered in the pharmaceutical and healthcare industry in Q4 2011. The report presents detailed comparative data on the number of deals and their value in the past five quarters subdivided into deal types, segments, and geographies. The report also offers information on the top venture capital and advisory firms in the pharmaceutical and healthcare industry.


Deal Values Of Mergers & Acquisitions Decline 39% In Q4 2011

Mergers and acquisitions (M&As), including asset transactions, reported a decline of 39% in deal values in Q4 2011, with pharmaceutical companies reducing their investments due to apprehensions about macro-economic conditions and patent expiries. The industry recorded $25.9 billion in Q4 2011, as compared to $42.1 billion in Q3 2011. On a year-on-year basis, deal values declined in Q4 2011, when compared to $47.1 billion in Q4 2010. However, the number of deals reported an increase in Q4 2011 with 231 deals as compared to 222 deals in Q3 2011. On a year-on-year basis, the number of deals recorded a decrease in Q4 2011, when compared to 303 deals in Q4 2010.

The central nervous system therapeutics market accounted for the majority of M&As during Q4 2011. The market recorded 22 deals worth $2.8 billion in Q4 2011. Infectious Disease therapeutics market was in second place with 20 deals worth $12.5 billion.

Gilead Sciences’ $11.2 billion acquisition of Pharmasset, a clinical-stage pharmaceutical company, to advance its efforts to develop an all-oral regimen for the treatment of chronic hepatitis C virus (HCV) and leverage its infrastructure and expertise in antiviral drug development, manufacture and commercialization, was one of the high-value transaction in Q4 2011.

According to Khaleeq Zakariya an analyst, “The global M&A deal values have declined in 2011. This trend was primarily driven by continued Eurozone crisis and other macroeconomic factors in the US. Across the globe, the North America region witnessed highest number of high-value transactions in Q4 2011”.

Partnership Deals Decrease 11% In Q4 2011

Partnerships in the pharmaceutical and healthcare industry reported a decrease in the number of deals in Q4 2011. The industry reported 171 deals in Q4 2011, as compared to 193 deals in Q3 2011. However, deal values increased from $4.1 billion in Q3 2011 to $5.1 billion in Q4 2011. On a year-on-year basis, the number of deals decreased and deal values increased in Q4 2011, when compared to 256 deals worth $4.2 billion in Q4 2010. Out of 171 deals reported in Q4 2011, 117 were co-development deals, 12 were co-marketing deals, 29 were joint venture deals and 13 were related to other category

The oncology therapeutics market stood ahead of all other therapeutics markets with 31 deals worth $875.6m in Q4 2011, the central nervous system therapeutics market followed with 21 deals worth $2.1 billion.

Total Value Of Licensing Agreements Increase In Q4 2011

The total value of licensing agreements in the pharmaceutical and healthcare industry reported an increase with companies in the industry increasing their investments to buy patents. The industry recorded deals worth $4.3 billion in Q4 2011, as compared to $1.5 billion in Q3 2011. Besides, the number of deals decreased to 110 in Q4 2011 from 129 in Q3 2011. On a year-on-year basis, licensing activity decreased in Q4 2011, when compared with 193 deals worth $9.9 billion in Q4 2010. Licensing agreements recorded an increase in the receipt of upfront payments and milestone payments in Q4 2011. The segment reported $1.2 billion and $2.8 billion in upfront payment and milestone payments in Q4 2011, as compared to $199.6m and $1.1 billion respectively in Q3 2011. Some of the key licensing deals in Q4 2011 include Biogen’s licensing agreement with Portola

Pharmaceuticals worth $553.5m to develop and commercialize novel oral Syk inhibitors for the treatment of various autoimmune and inflammatory diseases; Roche’s licensing agreement with PTC Therapeutics, worth $490m for PTC's Spinal Muscular Atrophy (SMA) programme and MacroGenics and Les Laboratoires entering into option for a license agreement for the development and commercialization of MGA271, a proprietary product candidate of MacroGenics.

According to Khaleeq Zakariya an analyst, “The licensing agreements in pharmaceutical and healthcare industry are a tool to improve manufacturing facility, distribution channels, to provide platform for entering in new markets and a wide scope for the commercialization of the products and technologies. During Q4 2010 to Q4 2011, the oncology therapeutics market recorded the highest number of licensing agreements followed by Infectious disease therapeutics market”.

Pharmaceutical And Healthcare Companies Were Sucessful In Raising Funds From Venture Capital Investors In Q4 2011

Companies in the pharmaceutical and healthcare industry were successful in raising funds from venture capital (VC) investors in Q4 2011. The industry recorded 216 deals worth $1.8 billion in Q4 2011, as compared to 169 deals worth $1.6 billion in Q3 2011. Out of 216 deals recorded in Q4 2011, 116 were start-up stage financing deals worth $870.3m, 61 were growth/ expansion stage financing deals worth $624.1m, 17 were later stage financing deals worth $296.7m and 22 seed stage financing deals worth $17.1m

The oncology therapeutics market remains lucrative for the venture capital investors. The market managed to raise $510.6m in Q4 2011 and stood ahead of all therapeutics markets. In second place was immunology therapeutics market with $409.7m.

According to Khaleeq Zakariya, “The pharmaceutical and healthcare industry has witnessed increasing trend of venture capital deals in past four quarters of 2011. The increase in deals number was primarily driven by high medical unmet need and potential drug therapies in developmental pipeline. Across the Globe, North America region witnessed maximum number of high-value transaction in Q4 2011. Oncology and central nervous system therapeutics market remains an area of interest for the venture capitalists. As these, segments have high medical unmet need and high return on investments”.

Deal Activity In North America Surge In Q4 2011

Deal activity in North America surge upward with slight improvement in economic conditions in Q4 2011.The region registered 672 deals worth $62.2 billion in Q4 2011, as compared to 566 deals worth $56.3 billion in Q3 2011. On a year-on-year basis, the number of deals and the deal values decreased in Q4 2011, when compared to 779 deals worth $63.1 billion in Q4 2010. The region was suscessful in recording some 14 major transactions which crossed the $1 billion mark in Q4 2011.

Europe recorded a decrease in the number of deals and an increase in deal values in Q4 2011 with 220 deals worth $10.9 billion, as compared to 248 deals worth $8.8 billion in Q3 2011. On a year-on-year basis, the number of deals and the deal values decreased in Q4 2011, when compared to 368 deals worth $31.8 billion in Q4 2010.

Asia Pacific recorded an increase in deal values in Q4 2011. The region reported deals worth $11.4 billion in Q4 2011, as compared to $6.2 billion in Q3 2011. However, the number of deals declined to 204 in Q4 2011 from 240 in Q3 2011.