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Despite lingering uncertainty over the implementation of the Affordable Care Act and the continued after-effects of the patent cliff, the pharmaceutical and biotechnology sectors saw huge deal activity in July and early August, with several multibillion- and multimillion-dollar mergers and acquisitions (M&As), and scores of smaller deals whose financial value was not released.
The deals spanned all sectors of pharma, biotech and life-science research, from global pharmas adding promising candidates to their pipelines to tool providers expanding their capabilities—and everything in between. Disease areas and customer needs also ran the gamut, from the market-leading field of oncology to the expanding world of bioinformatics, and deals crossed borders in key geographic territories around the world.
According to Thomson Reuters Recap, the first half of the year saw 1,234 life-science deals, with 152 disclosed M&As and 78 asset purchases. Chris Dokomajilar, a Recap manager and senior biopharma deals analyst, says the current M&A surge began in the fourth quarter of 2012 and has continued throughout the first half of this year "because there are a lot of companies worth buying."
Despite several deals topping the billion-dollar mark this summer, "the dollars were not there," Dokomajilar says. "We're eagerly waiting for those big M&A deals that we used to see in 2009 and 2010."
The month's largest and most talked-about deal was U.S. over-the-counter drugmaker Perrigo Co.'s purchase of Irish pharma Elan Corp. for $8.6 billion. Perrigo will move from its headquarters in Allegan, Mich., to Dublin, Ireland, where the corporate income-tax rate is 12.5 percent. Notably, the deal gives Perrigo royalties on the multiple sclerosis drug Tysabri, which Elan discovered and sold to Biogen Idec Inc. in February. The acquisition is a peaceful ending for Elan, which fended off three lower bids from U.S. investment firm Royalty Pharma amid injunctions and court hearings before putting itself up for sale in June.
Lagging behind Perrigo with a cool $1.6-billion total purchase price was antibiotics developer Cubist Pharmaceuticals Inc., which acquired San Diego-based Trius Therapeutics Inc. for about $707 million in cash, as well as Jersey City, N.J.-based Optimer Pharmaceuticals Inc. for $535 million in cash. Cubist CEO Michael Bonney said the acquisitions will help the company attain its goal of $2 billion in revenue by 2017.
"Each of these acquisitions is significant and valuable in its own right," Bonney told analysts in July. "The stars just happened to align in such a way we can do both."
Hovering just at the $1-billion mark was Johnson & Johnson, which completed its acquisition of Aragon Pharmaceuticals Inc. in mid-August. The deal gave Aragon $650 million in cash up front, with the potential for an additional $350 million in future milestone payments. Aragon's lead drug candidate is a second- generation androgen receptor signaling inhibitor being developed for the treatment of castration-resistant prostate cancer.
As part of its ongoing efforts to spin off its over-the-counter medicines unit, Pharmstandard, Russia's largest pharma, acquired Singapore-based pharma ingredient supplier Bever Pharmaceutical for $630 million. Pharmstandard said the deal will allow it to secure a long-term, fixed-cost supply of critical ingredients for two of its flagship over-the-counter brands, the anti-viral drug Arbidol and the anti-anxiety drug Aphobazolum.
Europe's largest biotech, Actelion, said it will acquire Ceptaris, a privately held U.S.-based specialty pharma focused on rare form of non-Hodgkin's lymphoma, for $250 million—but the deal is contingent on the U.S. Food and Drug Administration's approval of Ceptaris' Valchlor, a topical drug to treat cancer.
And French pharma Ipsen also got into the action with its acquisition of U.K.-based biotech Syntaxin for $207 million. Syntaxin specializes in botulinum toxin engineering, which can be used to block muscle spasms and tremors, and has a pipeline of potential treatments for pain and cancer. According to analysts, this isn't the usual bolt-on deal with a bigger company snapping up an experimental therapy; Syntaxin's co-founders, Drs. Keith Foster and John Chaddock, will join Ipsen to build a botulinum toxin biology platform for new drug development covering a variety of fields.
Squeaking in just under the $100-million mark was Illumina, which spent a reported $96 million to acquire Advanced Liquid Logic (ALL), a leading provider of liquid handling solutions. ALL, which is now a wholly owned subsidiary of Illumina, has developed a proprietary "digital microfluidics" technology based on electrowetting that precisely manipulates small droplets within a sealed disposable cartridge to perform complex laboratory protocols. According to Illumina, this technology will enable the company to deliver the simplest and most efficient sample-to-answer next-generation sequencing workflow.
The contract research market also got into the action. Quintiles acquired, for an undisclosed amount, Novella Clinical, a Quintiles neighbor in Research Triangle Park, N.C., that focuses on the oncology, medical devices and diagnostics sectors. Quintiles, which said the deal would help it stay ahead of the diverse and evolving needs of its global customer base, also said it expects a boost for its small biopharma capabilities.
Crown Bioscience, a global drug discovery and development service company, acquired the shares of Preclinical Oncology Services Limited (PRECOS), a preclinical research and development service provider with a specific focus on oncology, also for an undisclosed sum. Crown Bioscience said that as a result of the acquisition, it is now the world's only contract research organization that offers such a comprehensive range of services.
Players in the tool and instrumentation market also found mates. Waters Corp. acquired Nonlinear Dynamics Ltd., a proteomics and metabolomics analysis software company based in Newcastle upon Tyne, United Kingdom. Nonlinear Dynamics is best known for its Progenesis software, which offers researchers unique ways to analyze and visualize the raw proteomic data. Waters and Nonlinear Dynamics previously collaborated on the development of Waters' TransOmics Informatics, a scalable solution for proteomics, metabolomics and lipidomics analysis that Waters says has seen excellent market acceptance since it was first introduced at the American Society of Mass Spectrometry Conference in 2012.
And Beckman Coulter—which itself was acquired by Danaher in 2011—acquired the flow cytometry business assets of life-science technology company ReaMetrix of Bangalore, India. The transaction provides the company with temperature-stable, single-dose, multicolor antibodies targeting the HIV monitoring and clinical research markets. ReaMetrix's reagents claim to simplify the sample preparation process and provide highly standardized reagent combinations to cytometry laboratories around the globe. They are also among the first dry temperature-stable flow cytometry reagents CE-marked for in-vitro diagnostic use in Europe; they are not currently available or cleared for use in the United States.