Biotech M&A Strategies: Deal assessments, trends and future prospects

Biotech M&A Strategies: Deal assessments, trends and future prospects

M&A activity is gaining momentum - Biotech companies and niche biopharmaceutical concerns have become key targets for pharmaceutical companies seeking to fill gaps in their drug pipelines, while M&As between biotech companies are also growing in number. Sales of products from biotechnology and niche biopharmaceutical companies are out-performing sales of traditional, small molecule pharmaceuticals in the global market, making this an attractive sector.

Table of Contents
Biotech M&A Trends
Executive Summary 8
Introduction 8
M&A trends 2003-2008 9
Biotech M&A strategies 9
Case Studies 10
Strategies for success 11
Future trends 12
Chapter 1 Introduction 14
Summary 14
Introduction 15
Scope of report 16
Definition of M&As 18
Biotech an attractive target 20
Industry trends 21
Product development costs 22
M&A drivers 23
Challenges & opportunities 24
For sellers 24
For buyers 25
Future trends 25
Chapter 2 M&A trends 2003-2008 28
Summary 28
Introduction 29
Geographical breakdown of deals 30
Location of acquiring companies 30
Indian M&As fuelled by international expansion 32
Location of target companies 33
Deal values 35
Total M&A values 36
Average deal values 37
Average deal values by leading acquirers 38
Average deal values by target country 40
Conclusions 41
Chapter 3 Biotech M&A strategies 44
Summary 44
Introduction 45
Key target attributes 45
Factors influencing deals 47
Approved product deals 48
Late-stage product deals 50
Technology platform deals 51
Geographical expansion 52
Geographical trends 53
Acquisition valuation 54
Payment mechanism 56
The seller's perspective 57
Chapter 4 Case studies 60
Summary 60
Introduction 61
Case Study 1: Actelion/Axovan & CoTherix 62
Axovan acquisition 63
CoTherix acquisition 63
Conclusion 64
Case Study 2: Antisoma/Xanthus 65
Xanthus acquisition 66
Xanthus' assets 67
Impact of deal on Antisoma 68
Conclusion 69
Case Study 3: Forest Labs/Cerexa 70
Cerexa acquisition 71
Conclusion 72
Case Study 4: Solvay Pharmaceuticals/Innogenetics 72
Innogenetics 73
Bidding war 74
Conclusion 75
Case Study 5: Avant Immunotherapeutics/Celldex Therapeutics 76
The merged company 77
Conclusion 78
Chapter 5 Strategies for success 80
Summary 80
Introduction 81
Target selection 81
Funding acquisitions 82
Getting value from a sale 82
Restructure for sale 83
Case study: Nabi Biopharmaceuticals 84
Case study: Innogenetics 85
Myriad considering restructuring 85
The role of shareholders 86
Post M&A issues 87
Conclusion 88
Chapter 6 Future Trends 92
Summary 92
Introduction 93
Importance of M&A 94
Future drivers 95
Reverse mergers 96
M&A combinations 98
Product targets 99
Biotech industry outlook 100
Chapter 7 Appendix 101
Primary research methodology 101
Industry Survey 101
MedTRACK Database 106
Additional Research 107
Glossary 108
Index 109
List of Figures
Figure 1.1: Biotech drugs in development by therapeutic category* 21
Figure 1.2: Relative importance of M&A initiatives for company success in short to mid-term future 26
Figure 2.3: Number of M&A Deals 2003-2008 for which values are known 30
Figure 2.4: Top Locations of Acquirers of Biotech Companies 2003-2008 31
Figure 2.5: M&A trends by Indian companies 2003-2008 32
Figure 2.6: Top Locations of Biotech Targets 2003-2008 34
Figure 2.7: M&A trends by deal value 35
Figure 2.8: Total value of M&A deals ($ms), years 37
Figure 2.9: Average deal values ($ms), years 38
Figure 2.10: Trends of average value of M&A deals by country of acquirer 39
Figure 2.11: Average value of M&A deals by target location ($m), years 41
Figure 3.12: Buyers' key selection criteria 46
Figure 3.13: Key Drivers in 50 M&As 2007-2008 48
Figure 3.14: Payment mechanisms for 50 M&As 2007-2008 56
Figure 6.15: Relative importance of M&As for future company growth 94
Figure 6.16: Future trends in biotech/pharma M&A activity 98
Figure 7.17: Profile of respondents by company size 102
List of Tables
Table 1.1: Big Pharma, Japan Pharma & Biotech companies excluded from the scope of this report 17
Table 1.2: Global biotech leading therapy classes 2007 20
Table 1.3: Biotech development costs ($m) 23
Table 2.4: Number of Biotech M&A deals included for geographical analysis 29
Table 4.5: Actelion Financial Overview 62
Table 4.6: Key late-stage products in Forest's pipeline 70
Table 4.7: Innogenetics' key diagnostic product areas 73
Table 6.8: Importance of different motivations behind M&A strategies 95
Table 7.9: Profile of respondents by company products/service offering 101
Table 7.10: Profile of respondents by core responsibility 103