Increasing Volume and Decreasing Value

Objectives of the Study

Rationale for M&As

The challenges posed by expiring patents, the global economic slowdown, generic competition, reduced healthcare spending, and price premium pressures are forcing the pharma and biotech industry to restructure and streamline strategies to increase profitability. M&As have become key for the reversal of reduced profitability by opening access to new markets while creating more revenue pools and to some extent compensating for the depletion of the R&D pipeline.

Key Trends

- Big pharma’s contribution to M&A deal value has been decreasing, unlocking big pharma’s inability to participate in high-value deals over the past few years.
- The trend of increasing low-value deals is expected to continue. However, big pharma’s balance sheets show signs of a few mega deals.
- North America remains the most active region in terms of both number and value of deals.
- The pharmaceutical and biotechnology stock market indices continue to outperform the S&P 500 index.
- Biotechnology deals witnessed higher stock premiums compared to the pharmaceutical sector.
- Horizontal integration remains key in both the pharmaceutical and biotechnology sectors.

Key Terms Used in the Study

Transactions
- M&A: Mergers and acquisitions is an aspect of corporate strategy, corporate finance, and management by which corporations legally unify ownership of assets formerly subject to separate controls. The term “deal” in the study refers to M&A transactions.
- The Industry is comprised of 2 sectors, pharmaceutical and biotechnology.

Sector
- Pharmaceutical: Companies engaged in the research, development, or production of pharmaceuticals.
- Biotechnology: Companies primarily engaged in the research, development, manufacture, and/or marketing of products based on genetic analysis and genetic engineering. This includes companies specializing in protein-based therapeutics to treat human diseases.

Big Pharma
The collective term referring to the largest participants in terms of revenue in the pharmaceutical sector. The list of companies included in this study is provided in the glossary.

Big Biotech
The collective term referring to the largest participants in terms of revenue in the biotechnology sector. The list of companies included in this study is provided in the glossary.

Study’s Key Objectives Include:
- Analyzing the mergers and acquisitions (M&A) trends in the global pharma and biotech industry
- Identifying the key M&A trends in the industry based on geographies, deals across sectors, and the natures of buyers
- Conducting a financial analysis of the deals with respect to valuation multiples
- Identifying, comparing, and assessing geographical regions that have current and potential M&A activity
- To arrive at strategic conclusions based on the key trends observed

Analysis Includes

- Across sectors
- Across geographies
- Valuation multiples
- Stock price variations
- Percentage of stake acquired
- Type of buyers

Who will benefit?

- Companies operating in the global pharma and biotech industry
- Private equity
- Venture capital investors
- Fund managers
- Retail investors
- Sovereign wealth funds
- Hedge funds
- Insurance funds and other members in the investing community

Table Of Contents

Merger and Acquisition (MandA) Trends in the Global Pharmaceutical and Biotechnology Industry
Executive Summary
Introduction
The Key Rationale for MandA
Key MandA Indicators
Geographic Analysis
Cross-border Deal Analysis—Buyer's Perspective for Asia-Pacific, Europe, and North America
Sectorial Analysis—Pharmaceutical
Sectorial Analysis—Biotechnology
Percent Stake Sought and Target Stock Premium Analysis
Conclusion
Appendix
The Frost and Sullivan Story

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