The Recession and its Impact on Pharmaceutical M&A Activity

Expert analysis and detailed case histories illuminate the effect on, and activities of, pharmaceutical companies in the current economic downturn.

Mergers and, more commonly, acquisitions have long been popular in the pharmaceutical industry. Whether it has been to support flagging drug pipelines, secure IP on promising drug candidates or to quickly access new markets, the industry has for many years been characterised by a vibrant M&A culture. The current recession has, therefore, had a significant impact on the industry' s players, and in more ways than might be immediately obvious.

The limited availability of credit to fund - through share issue or capital loans - drug discovery programmes, has denied many development companies the ability to progress independently. At the other end of the scale, high-profile acquisitions have had to be funded from cash. The ability of companies to operate on this basis has been limited by the level of liquidity they hold and an increased awareness of the short-term benefits of revenue increase and cost savings.

Activity expands

The nature of the recession and the limited access to credit has sparked a round of mergers and acquisitions. Companies unable to secure the finance they need have been opportunistically targeted by those with the means to buy.

This report provides a complete and thought-provoking assessment

The Recession and its Impact on Pharmaceutical M&A Activity is a closely-argued analysis of how the recession has affected the industry.

It considers three elements:

• The recession - a detailed examination of the recession, its causes and effect
• The industry' s relationship with financial markets - the use of credit and the role played by shares in the movement of working capital
• Responses - how the industry has responded to the changes and challenging circumstances.

• Why has this recession been so severe and what distinguishes it from other economic downturns?
• Why has the pharmaceutical industry been especially hard hit?
• Does this recession raise questions about how drug development is funded?
• To what degree did the recession and its effect on capital markets make CV Therapeutics vulnerable to takeover?
• What are the prospects for future deals and which companies might be involved?

Case histories provide detailed insights

The report looks at a range of recent deals and examines the motivations and dynamics which underpin them.

• Gilead - CV Therapeutics
• Johnson & Johnson - Cougar Biotechnology
• GlaxoSmithKline - Stiefel
• Pfizer - Wyeth
• Merck & Co - Schering- Plough
• Roche - Genentech

This report has been researched and written by Economist Simon Ward. Simon has many years experience in observing and reporting on international health company developments. In addition to this report, he was for many years editor of Medical Device Companies Analysis and has produced a number of reports for Espicom.