Pharma continues parachute-building for patent cliff

Last month was a big one for pharma dealmaking, as anyone following the industry knows well. The list of deals, bids and potential deals is long--$33 billion long, as Dealogic tells the Financial Times.

Here are a few of the highlights:

  • GlaxoSmithKline's ($GSK) $2.6 billion offer for Benlysta partner Human Genome Sciences ($HGSI).
  • Watson Pharmaceuticals' ($WPI) $5.9 billion buyout of generics rival Actavis.
  • Novartis' ($NVS) $1.5 billion deal for dermatology generics maker Fougera.
  • Amgen's ($AMGN) buyout of Turkish generics maker MN Pharma.
  • Pfizer's ($PFE) $12 billion nutrition-unit selloff.

Not to mention options-exploring at the likes of Amylin Pharmaceuticals ($AMLN) and Warner Chilcott ($WCRX), plus rumored on-the-verge deals, such as Bayer's supposed multi-billion-dollar acquisition.

As the FT points out, many drugmakers have impressive stashes of cash, and credit is cheap for those that don't. But the impetus for many of these deals goes beyond the availability of financing. It's that familiar combination of patent losses and R&D difficulties that's behind the pharma shopping spree. "We're in an attractive M&A market as big-cap pharma companies are looking to acquire innovation to address their patent cliffs," sums up Moelis & Co.'s Rick Leaman.

It's a spree of long standing, of course. Drugmakers have been mustering for today's patent cliff for years now. As the FT reports, Sanofi ($SNY) CEO Chris Viehbacher (photo) started prepping for this month's loss of Plavix exclusivity ever since he took over as CEO in 2008. One of his solutions: Buying Genzyme last year in a $20.1 billion deal. And then there were all the smaller buys in generics, consumer health, emerging markets and more.

"It's T-minus three weeks," Viehbacher told the FT of Plavix's patent expiration. "When I joined this industry in 1988, everybody was predicting doom and gloom," he goes on. "But it has proved more resilient, with consolidation and diversification. We do adapt." We'll see the results of Sanofi's attempts when the post-Plavix numbers start to roll in.

- read the FT coverage