Will the biotech dealmaking lull extend through the rest of the year?
PricewaterhouseCoopers has been running the numbers on deals and dollars in the biopharma industry. And the big accounting firm is echoing a growing lineup of analysts who see that dealmaking in the industry is suffering even as IPOs are booming. But easy access to cash could change things around dramatically in the second half of this year.
PwC zeroed in on quarterly activity across the life sciences industry and found a sharp drop off in dealmaking in the second three months of the year. Deal volume was down 37% compared to the first quarter of the year for pharma, biotech and devices while deal value was up 66%--but down 32% from the same period a year ago. Most of the activity was in pharma while biotech, devices and diagnostics all declined.
Breaking down deal trends quarter-by-quarter has its problems, as a few large deals in any three-month span can skew the numbers. But the overall trend indicates a distinct lull developing in the first half of 2013. PwC, which relied on data from Thomson Reuters, doesn't think that this one has to last through the rest of the year. And it may well turn out to be a seller's market.
"Current trends suggest the PLS (pharmaceutical, life science) industry is poised for increased deal activity throughout the remainder of 2013 due to readily available financing, strong corporate balance sheets and cash levels, and strong equity markets," noted PwC analysts. "However, relatively scarce assets may limit overall deal volumes, driving competition among buyers. This is consistent with trends in deal volumes and average deal values observed in the first and second quarter of 2013."
Top deals in the first half include Elan's ($ELN) $3.3 billion pact with Biogen Idec ($BIIB) for Tysabri rights, AstraZeneca's ($AZN) acquisition of Pearl Therapeutics and Shire's ($SHPG) buyout of SARcode.
- here's the report from PwC (PDF)
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