Global pharmaceutical companies facing major patent expirations have announced billions of dollars of transactions in a wave of deal-making that could ultimately include mega-mergers and hostile takeovers.<\/p>\n
On Tuesday, Switzerland\u2019s Novartis, GlaxoSmithKline of Britain and US group Eli Lilly announced nearly $25 billion worth of deals to shift key assets in oncology, vaccines and animal health among the three giants.<\/p>\n
The same day, Canadian company Valeant, working with activist investor Bill Ackman, unveiled a bid to acquire Botox-maker Allergan for $45.6 billion. The proposal suggested Valeant would launch a hostile campaign if management does not accede to \u201cproductive discussions.\u201d<\/p>\n
Both deals were shadowed by the possibility of an even more dramatic outcome: the purchase by US giant Pfizer of Britain\u2019s AstraZeneca for more than $100 billion. Pfizer reportedly approached AstraZeneca about such a deal, although talks are not active.<\/p>\n
The stream of activity comes as pharmaceutical giants seek to make up for lost sales as patents expire and as medium\u2013sized firms and generics specialists take steps to grow by acquisition.<\/p>\n
\u201cWe expect the next few years to be particularly active from a mergers and acquisitions perspective and hence pivotal in the reshaping of the industry,\u201d said Barclays analyst Shubhomoy Mukherjee.<\/p>\n
If this week\u2019s transactions are completed, including Valeant-Allergan, that would lift the total on healthcare deals in 2014 to $162.1 billion, making it the second biggest sector in terms of deals after telecommunications, according to Dealogic.<\/p>\n
Driving the realignment is pressure on pharma giants to build up specialty businesses and exit lower-priority investments that in some cases have suffered from their second-fiddle status within their companies.<\/p>\n
Pharma companies typically enjoy huge profit margins on blockbuster drugs, but the expiration of patents leaves them vulnerable to steep declines in sales.<\/p>\n
AstraZeneca chief executive Pascal Soriot said the bulk of the British giant\u2019s research investment focused on three core areas \u2014 oncology, cardiovascular and metabolic disease, and respiratory, inflammation and autoimmune problems.<\/p>\n
The company, aiming to spend less outside these fields, is exploring \u201cpartnering options\u201d for its remaining research in infectious diseases and other areas, Soriot said.<\/p>\n
\u201cWe\u2019re looking at a variety of options that we hope to conclude very quickly,\u201d he said.<\/p>\n
Soriot would not be drawn into a discussion of a Pfizer deal, but the Astra chief argued the company can make it on its own.<\/p>\n
\u201cOf course we are always considering options that accelerate shareholder value where it makes sense,\u201d he said. \u201cBut at this point in time we are very convinced that our strategy is working. \u201cWe are creating value through progressing our pipeline. And we\u2019ll continue doing this on an independent basis.\u201d<\/p>\n
Recovering from the \u2018patent cliff\u2019<\/p>\n
The Novartis-Glaxo-Lilly transactions further Novartis\u2019 efforts to boost its specialties in oncology, Glaxo\u2019s efforts to build vaccines and Lilly\u2019s efforts to become a bigger player in animal health.<\/p>\n
Novartis and Glaxo also announced plans to create \u201ca world\u2013leading consumer healthcare business\u201d focused on wellness, oral health, nutrition and skin health. The venture would sell popular remedies to quit smoking and address back pain, and is geared at growing market share in developed and emerging markets.<\/p>\n
Valeant too is looking to become a dominant force in choice fields, which include dermatology, aesthetics and ophthalmology. Valeant has said its goal is to become one of the five biggest pharma companies by 2016.<\/p>\n
Merck, which has slashed headcount as it contends with the loss of patent exclusivity of its allergy and asthma drug Singular and other best-sellers, is reportedly looking to divest its consumer\u2013brands business for $10 billion or more. The unit includes products like Coppertone and Claritin.<\/p>\n
Merck has also streamlined its research efforts to focus on Alzheimer\u2019s, oncology and other choice areas.<\/p>\n
Analysts said AstraZeneca could provide Pfizer with some strong products in oncology, cardio-metabolism and other fields, complementing the US giant\u2019s offerings and adding to its product pipeline.<\/p>\n
Pfizer, which has faced the challenge of falling off the so-called \u201cpatent cliff\u201d for Lipitor and other blockbusters, also has a history large mergers.<\/p>\n
\u201cThe thought process is that it may be faster and more prudent to buy products through mergers and acquisitions,\u201d said analysts at Credit Suisse. \u201cIt takes out uncertainties. It may be more simple and much cheaper than attempting to develop new products.\u201d<\/p>\n
But Pfizer\u2019s recent moves have not telegraphed a mega-merger as the most likely course, analysts said.<\/p>\n
Pfizer last year spun off its animal-health business into Zoetis and has begun restructuring its operations into three units.<\/p>\n
Given these actions, Credit Suisse assessed an Astra deal as \u201csurprising\u201d and less likely than \u201cbolt-on acquisitions.\u201d<\/p>\n
Agence France-Presse<\/p>\n","protected":false},"excerpt":{"rendered":"
Global #pharma deal fever<\/p>\n","protected":false},"author":1,"featured_media":2100,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[301,302,24,303,1],"tags":[186,200,185,163,305,317,187],"class_list":["post-2099","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lean-lean-six-sigma","category-lean-manufacturing","category-lean-six-sigma","category-manufacturing-strategy-consulting","category-uncategorized","tag-bmy","tag-gsk","tag-jnj","tag-lean","tag-lean-manufacturing-2","tag-lean-six-sigma","tag-mrk","post-with-thumbnail","post-with-thumbnail-icon"],"yoast_head":"\n