Smaller Fish in Bigger Ponds- M&A lookouts

 

Mergers and Acquisitions are something which pharma industry cannot stay away from. 2015 was completely swapped by merger trend with AbbViee acquiring Pharmacyclics; a leader in the hematological oncology market for a hopping price of $21 billion [1] [2] whereas 2016 saw a complete downfall. The M&A fever doesn’t seem to be slowing down even in 2017. As the companies continue with their product success and growth in the market but somewhere they still have to struggle with regulatory and commercialization challenges. Furthermore, the economical pressure on the markets is also pushing up; so the easier way is to create value and surpass it is through mergers and acquisitions.

The big pharma companies often face challenges with outsized costs and time required for R&D whereas smaller companies struggle with commercialization, so the best way out is to get allied to bring in adequate revenue. The Big Pharma companies acquire smaller ones to strengthen their existing assets or get new pipelines- instead of doing it from scratch. These companies often acquire or ally with promising startups in order to develop their technology and forward it to commercialization. Giant companies such as Johnson and Johnson are eyeing early stage innovation to extent their efforts; it has motivated and incubated many technology based companies. In start of 2017, Johnson and Johnson acquired Actelion for a whopping price of approximately $30 billion in cash. [3] In June 2017, Actelion became part of the Janssen Pharmaceutical Companies of Johnson & Johnson. Actelion’s medicines help expand and strengthen Janssen’s portfolio with leading, differentiated in-market medicines and promising late-stage compounds. Janssen has added Pulmonary Hypertension as a therapeutic area of focus to maintain the leadership position; Actelion has built in this important disease area. The other major transaction in the first quarter of 2017 is acquisition of Ariad Pharmaceuticals for $ 5.2 billion by Takeda Pharmaceuticals. [4] [5]

Medtronic, the global medical devices manufacturer known for its stents is looking out for startups for intellectual property aligned with its portfolio of chronic ailments. Medtronic plc and Glooko, the trusted leader in diabetes data unification and analytics have an agreement since 2015. [6] The partnership will incorporate information from Medtronic insulin pumps and continuous glucose monitors (CGM) into Glooko’s secure, unified, cloud and mobile-based diabetes management platform. Glooko will receive $35 million where it plans to build its sales, marketing and development teams. In general, oncology market is being a popular area of investment within the industry. Konica Minolta, Inc. and Ambry Genetics Corporation have signed an agreement to acquire Ambry. [7] Konica has been struggling to boost its flagship multifunctional printer business. The acquisition of Ambry and the advancement of precision medicine mark a strategic and important shift for Konica Minolta’s healthcare business. With Ambry’s genetic testing capability and Konica Minolta’s advanced imaging technology it will create the most comprehensive range of healthcare diagnostics for use by pharmaceutical companies, healthcare providers, payers, and consumers. Pfizer, a leader in oncology acquired Medivation, a biopharmaceutical company focused on developing and commercializing small molecules for oncology, for $81.50 a share in cash for a total enterprise value of approximately $14 billion in 2016 with an intention to accelerate revenue growth and drive overall earnings growth of Pfizer. [8]

Looking at the overall scenario of bigger companies investing in smaller ones for M&A deals while they are bit hesitant to invest in new in-house research and development activities so the only way out is making investment in startups for R&Ds. These companies are usually acquired when they are in the last phase of development. Smaller companies often lack with commercialization which bigger companies have good hold so the merger between a big company and a small company is like using one another for its own benefit. With the change in the global economic position; mergers and acquisitions still have a long way to go in the remaining months of 2017.

References:
1. https://news.abbvie.com/news/abbvie-to-acquire-pharmacyclics-including-its-blockbuster-product-imbruvica-creating-an-industry-leading-hematological-oncology-franchise.htm
2. https://news.abbvie.com/news/abbvie-completes-acquisition-pharmacyclics.htm
3. https://www1.actelion.com/media/media-releases?newsId=2113719
4. http://investor.ariad.com/phoenix.zhtml?c=118422&p=RssLanding&cat=news&id=2234984
5. https://www.takeda.com/newsroom/newsreleases/2017/Takeda-Completes-Acquisition-of-ARIAD-Pharmaceuticals-Inc/
6. http://newsroom.medtronic.com/phoenix.zhtml?c=251324&p=irol-newsArticle&ID=2056781
7. https://www.konicaminolta.com/about/releases/2017/0706_01_01.html
8. http://www.pfizer.com/news/press-release/press-release-detail/pfizer_completes_acquisition_of_medivation

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