Last year Europe's pharma giants spent $2.1 billion on acquisitions, just a fraction of the $42.7 billion shelled out in 2010 as mega-mergers fell out of fashion and stock buybacks became all the rage. But with the patent cliff cutting the marketing legs out from under $21 billion in blockbuster sales--and high-profile buyouts in hepatitis C chumming the waters--Bloomberg put together an interesting case that 2012 will see a big spike in biotech buyouts. And there's absolutely no reason to believe that this kind of trend will be restricted to Europe.
"Things going generic tend to encourage deal-making," Miller Tabak's Les Funtleyder tells Bloomberg. "You can never have enough pipeline." And then there's the target-rich environment in biotech to consider. Bloomberg Industries' Andrew Berens says that there are 18 biotechs trading at only twice the value of their cash reserves.
Funtleyder also notes that some of the Big Pharma brethren in Europe--AstraZeneca, Sanofi and Novartis--all had to weather setbacks in the clinic near the end of 2011, yet another motivation for getting out into the market and scouting for those classic "bolt-on" acquisitions that make relatively small biotechs attractive.
Bloomberg singles out Genmab and Active Biotech as two examples of biotech companies which fit the bill as takeover targets. But biotech is a global business. And there's no reason to believe that Big Pharma's appetite for buyouts would be limited to the continent. There's also no reason to believe that smaller companies won't get into the bidding wars. With small biotechs being given the cold shoulder in the IPO market, 2012 looks ripe for a spike in M&A deals. There are plenty of buyers and sellers circulating in biopharma to drive a new round of deals.
- here's the story from Bloomberg