Just one week into 2019, the new year got off to the proverbial roaring start for biopharma mergers and acquisitions (M&A) with the announcement of two multi-billion-dollar deals valued at a total $82 billion—one of them among the top 10 of all time.
Those deals accounted for roughly half the sizzling $173.326 billion in 14 biopharma drug-based M&A deals recorded for the first half of 2019 by Chimera Research Group. Chimera does not record buyouts in biopharma tools and tech—which also sparkled this year with two deals totaling $22.7 billion. And it didn’t include earlier-announced deals completed in 2019, such as Takeda Pharmaceutical’s £46 billion ($58.6 billion) purchase of Shire.
Indeed, the value of just the top 10 deals completed and/or announced by biopharmas so far this year—and highlighted on this list—surpassed $250 billion during the first half of 2019. That’s 47% above the $170.2 billion combined value of the top 10 M&A deals during the first six months of 2018, highlighted in GEN’s A-List of Top 10 M&A Deals of January-June 2018.
One key factor driving the current wave of biopharma R&D is the diminishing return on investment (RoI) generated by traditional in-house R&D. In December 2018, Deloitte’s Center for Health Solutions issued a report concluding that the projected RoI fell to 1.9% last year from 3.7% in 2017, and from 10.1% in 2010, the first year Deloitte began its annual study of the topic. The decline, according to Deloitte, reflects the rising average cost to develop and win marketing approval for new treatments.
Diminishing RoI has compelled drug developers facing loss of exclusivity for marketed drugs to expand portfolios and replenish their pipelines through M&A.
The M&A market was robust enough during the first half of this year that five transactions exceeding $1 billion in value were too small to be included on GEN’s list. The largest of these was Novartis’ up-to-$1.575 billion purchase of IFM Tre, a subsidiary of IFM Therapeutics. That deal, completed May 8, expanded Novartis’ pipeline with one clinical and two preclinical programs designed to treat chronic inflammation by inhibiting targets in the innate immune system.
The rest of those deals included:
- Ipsen’s up-to-$1.31 billion acquisition of Clementia Pharmaceuticals, completed April 19 and driven by a rare-disease drug the buyer licensed from Roche in 2014.
- Catalent’s $1.2 billion buyout of Paragon Bioservices, completed May 19 and intended to expand the buyer’s gene therapy capabilities.
- Illumina’s pending $1.2 billion merger with Pacific Biosciences—a deal expected to be delayed since the U.K.’s Competition and Markets Authority on June 18 raised anti-competitiveness concerns that may result in a second-phase investigation.
- Vertex’s up-to-approximately $1 billion purchase of Exonics Therapeutics, a developer of CRISPR-based treatments for Duchenne muscular dystrophy and other genetic neuromuscular diseases, announced June 6.
Below is a list of the top 10 largest M&A deals for the first half of 2019 as disclosed by drug developers and tools/tech companies, ranked by deal value in U.S. dollars. Each acquired company is listed along with its acquirer or prospective acquirer, the price, the status of the deal, and the buyer’s stated reason for pursuing the deal.
Not included are purchases of rights to specific drugs rather than whole companies. If they were included, this list would feature AstraZeneca’s up-to-$6.9 billion global development and commercialization collaboration agreement with Daiichi Sankyo for trastuzumab deruxtecan (DS-8201), and Novartis’ up-to-$5.3 billion purchase of the dry eye drug Xiidra® (lifitegrast ophthalmic solution) 5% from Takeda, a deal completed July 1.
|10.||Brammer Bio||Acquired by: Thermo Fisher Scientific
Price: Approximately $1.7 billion
Deal status: Completed May 1. Thermo Fisher increased its presence in gene therapy with the viral vector contract development and manufacturing organization (CDMO) through the deal, announced March 24. Brammer’s chief operations officer before the deal—Christopher K. Murphy, now vp and general manager of viral vector services in Thermo Fisher Scientific’s Pharma Services Group—told GEN in June that Thermo Fisher will complete $100 million in Brammer Bio capital expansion projects designed to satisfy growing demand for gene therapies for clinical and commercial use.
|9.||Peloton Therapeutics||Acquired by: Merck & Co.
Price: Up to $2.2 billion
Deal status: Expected to close in the third quarter. Merck aims to expand its cancer pipeline through the deal, announced May 21. Merck plans through a subsidiary to acquire all outstanding shares of Peloton in exchange for $1.05 billion cash upfront. Merck has also agreed to pay Peloton shareholders up to $1.15 billion tied to achieving regulatory and sales milestones.
|8.||Spark Therapeutics||Acquired by: Roche
Price: $4.8 billion
Deal status: On June 10, Roche extended again its tender offer for shares of Spark Therapeutics, after both companies received a request from the U.S. Federal Trade Commission (FTC) for additional information in connection with the agency’s review of the acquisition, announced February 25. Spark shareholders now have until July 31 to tender their shares. Roche acknowledged that on June 7, shareholders representing just approximately 21.1% of Spark’s outstanding Shares had been validly tendered and received. At least 50% of Spark shares are required for completion of the deal.
|7.||Tesaro||Acquired by: GlaxoSmithKline (GSK)
Price: Approximately $5.1 billion
Deal status: Completed January 22. GSK said the acquisition, announced December 3, 2018, was intended to “significantly” accelerate the development of its pipeline and commercial capability in oncology with Tesaro’s marketed once-daily oral poly ADP ribose polymerase (PARP) inhibitor Zejula™ (niraparib), under study for several additional cancer indications. GSK also cited Tesaro’s pipeline of additional oncology candidates, including antibodies directed against PD-1, TIM-3, and LAG-3 targets. Tesaro was among “10 Takeover Targets” included in GEN’s A-Lists published in February 2018 and again in September 2018.
|6.||Loxo Oncology||Acquired by: Eli LIlly
Price: Approximately $8 billion
Deal status: Completed February 15. Eli Lilly jolted this year’s J.P. Morgan 37th Healthcare Conference in San Francisco when it announced the deal January 7. Lilly signaled it was serious about catching up in cancer drug development by becoming a top-tier precision oncology company, Brad Loncar, CEO of Loncar Investments, who tracks developments in cancer immunotherapy and the broader biopharma industry, told GEN.
|5.||Array BioPharma||Acquired by: Pfizer
Price: Approximately $11.4 billion
Deal status: Announced June 17, the planned acquisition reflects Pfizer’s intent to expand its oncology presence and pipeline. Array’s combination of Braftovi® (encorafenib) and Mektovi®(binimetinib) is approved for BRAFV600E or BRAFV600K mutant unresectable or metastatic melanoma, and is now being investigated in the Phase III BEACON trial (NCT02928224) in patients with BRAF–mutant metastatic colorectal cancer—one of 30+ clinical trials across several solid tumor indications. The boards of Pfizer and Array have approved the acquisition, which is expected to be completed in the second half of this year.
|4.||GE BioPharma (BioPharma business of GE Life Sciences)||Acquired by: Danaher
Price: Approximately $21.4 billion
Deal status: Announced February 25, the deal is designed to enhance Danaher’s bioprocessing offerings and pay down GE’s debt. Danaher president and CEO Thomas P. Joyce, Jr., said in the company’s first-quarter earnings press release on April 18 that his company continues to expect the deal to close in the fourth quarter of this year.
|3.||Shire||Acquired by: Takeda Pharmaceutical
Price: £46 billion ($58.6 billion)
Deal status: Completed January 7. Takeda president and CEO Christophe Weber trumpeted the deal as accelerating “our transformation journey to deliver highly-innovative medicines to patients around the world with expanded scale and geographical footprint.” Three weeks later, on January 28, Tokyo-based Takeda announced it was selling its former headquarters site in Osaka among non-core assets, in order to reduce debt that ballooned to ¥5.4 trillion ($50.3 billion). In May, Weber ratcheted up projected annual savings to $2 billion by the end of 2021, up from $1.4 billion.
|2.||Allergan||Acquired by: AbbVie
Price: $63 billion
Deal status: Announced June 25, the acquisition would create a $48 billion biopharma giant, based on 2019 revenues, by strengthening AbbVie’s topline with the up-to-$15.425 billion projected this year by Allergan. The deal, set to close in “early 2020,” comes as AbbVie is three years away from losing U.S. market exclusivity for its longtime top-selling drug Humira® (adalimumab), which topped GEN’s A-List of the Top 15 Best-Selling Drugs of 2018.
|1.||Celgene||Acquired by: Bristol-Myers Squibb (BMS)
Value: Approximately $74 billion
Deal status: BMS acknowledged June 24 that its acquisition of Celgene will take longer to close than initially anticipated, stating that it now expects to complete the purchase “at the end of 2019 or the beginning of 2020,” rather than during the third quarter as predicted when the deal was announced on January 3. The extra time became necessary when BMS agreed to divest itself of the psoriasis drug Otezla® (apremilast) to address “concerns” raised by the U.S. Federal Trade Commission (FTC) about the blockbuster deal. Shareholders of both companies have approved the acquisition, designed to create a powerhouse in immunology and inflammation, cardiovascular disease, and oncology.