Abstract
Introduction
Pharmaceutical market growth rates have halved inside the past five years, and
will remain modest into the next decade. At the same time, new drug approval
rates have slowed. With costs continuing to rise, the industry' s margins are
already being squeezed, but will come under growing pressure as payers adopt
more stringent pharmaceutical cost-containment policies and as patents on a
slew of blockbusting brands expire.
The world' s ten biggest pharmaceutical companies have committed almost $230bn
to M&A deals since the beginning of 2007. The size of their assets and the
cash-generating capabilities of their existing businesses have rendered them
largely immune from the effects of the global economic downturn, during which
big pharma M&A spending has actually accelerated. Key M&A announcements will
continue to be made on a regular basis into 2010 and beyond.
Key findings of this report
- The pharmaceutical industry' s ten biggest players face the expiry of
patents on brands that generate annual revenues of more than $130bn within the
next five years. This ‘patent cliff' is driving the acquisition of
biotech assets designed to strengthen big pharma pipelines.
- Biotech/biopharma companies were the subject of nearly half the M&A
transactions completed or announced by leading pharmaceutical companies
between January 2007 and July 2009, and accounted for four of the ten biggest
M&A deals witnessed in that period.
- The world' s ten biggest pharmaceutical companies generated prescription
drug sales totaling $308bn in 2008. Their operations generated aggregate net
cash of more than $106bn and pre-tax profits of $81bn. At the end of 2008 they
were sitting on collective net assets worth $354bn.
- The ten leading companies have completed or reached definitive agreements
on 64 M&A deals since January 2007. Together, they have committed almost
$230bn to healthcare M&A transactions in the past two-and-a-half years.
- Biotech companies aside, consumer healthcare and generic businesses are
among the most popular acquisition targets, reflecting a desire on the part of
big pharma to reduce levels of exposure to conditions in the global market for
prescription drugs.
- Two of the world' s five biggest generics businesses are active candidates
for disposal. Sandoz and Teva aside, all of the world' s other leading generic
companies are potential acquisition targets.
Use this report to:
- Quantify individual pharmaceutical company exposure to major patent
expiries in the next five years.
- Compare the strengths and weaknesses of big pharma pipelines and identify
the gaps that biotech acquisitions will be used to plug.
- Track recent M&A activity by the world' s ten biggest pharmaceutical
companies in terms of both deal values and strategic intent.
- Gain valuable insights into the strategic approaches to M&A activity being
pursued by individual big pharma CEOs.
- Understand why most previous pharmaceutical mega-mergers failed to deliver
long-term benefits, and how Pfizer and Merck hope to avoid repeating the
industry' s past mistakes.
- Identify prime biotech/biopharma acquisition targets and the global,
regional or national generic businesses most likely to attract acquisition
bids.
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