The word “deal” has a curiously apt set of meanings when it comes to M&A. It’s the hook-up of two companies, of course. But according to the Oxford English Dictionary, it also means “to cope with or control” and “take measures ... especially with the intention of putting something right.”
Pharma deals are certainly designed to do both: cope with slow growth, for instance, or put right a pipeline or portfolio that’s out of whack with the times.
And then there’s the meaning listed first in the OED. Deal, as in cards. And M&A, even the most well considered deal, is certainly a gamble, and dependent on negotiations that often require poker-table posturing.
Our readers’ nominations for best and worst M&A of the past 10 years show that the gamble can pay off—or not. And like the folks watching poker competitions, they have strong feelings about the players involved.
The most pointed comments came with nominations for worst deal. Predictably, readers piled on Valeant and its debt-fueled, growth-by-M&A strategy. “Valeant buying most anything,” one reader suggested. “Valeant is woefully unprepared to evaluate/create value from any acquisition,” said another in explaining a nominee for the struggling drugmaker’s Salix Pharma buyout.
Others lambasted Pfizer and its series of megadeals, though plenty also tagged its $63 billion Wyeth buy in 2009 as a success.
But the most nominations for a single bad deal—20 of them—came for Teva Pharmaceutical’s $45 billion buyout of Allergan’s generics business, a relic of its own Actavis-Allergan merger. That deal has come in for plenty of criticism lately as generic pricing pressure dragged down its value to the Israeli drugmaker.
“Teva, in a difficult situation, made matters dramatically worse instead of biting the bullet and investing in longer term branded R&D,” one reader said. “$40 billion? Really? What was the multiple on that?” another asked. And a third simply asked, “What was Teva management thinking?”
We’ve gathered other pithy comments below. But let’s turn to the positive now. The year of the megadeal, 2009, garnered more than its share of nominations, with Roche’s buyout of Genentech in the lead and Merck’s $43 billion Schering-Plough buy winning as many backers as Pfizer-Wyeth. All together, the deals of that year won kudos from almost 50 readers.
A few smaller deals—Gilead Sciences’ buyout of Pharmasset, which yielded its powerhouse hepatitis C portfolio; Bristol-Myers Squibb’s IO-focused deal for Medarex; and Sanofi’s 2011 buyout of rare disease and biologics specialist Geynzyme—together won a slew of nominations.
You'll have a chance to vote with the ballot below. To help you choose, we've also put together some background information on those deals below the ballot.
Here are the nominees for the best deals of the past decade, along with some reader comments.
- Abbott Laboratories’ AbbVie spinoff. On the first day of 2013, Abbott’s pharma business became its own publicly traded company, AbbVie, which made its debut at a market cap of more than $50 billion. “Win-win for both,” one reader said. Another: “Abbvie continuous with good partnership deals and leadership roles in the AI space and liquid tumor area.”
- Actavis-Allergan merger. This $66 billion megadeal was Actavis’ capstone, taking it far beyond the generics company it used to be. Indeed, the combo—which took the Allergan name—has jettisoned those generics in a deal that now looks quite timely. And it moved the tax domicile to Ireland. “Created best of branded Actavis and Allergan with an Irish tax rate,” as one reader noted.
- Bristol-Myers-Medarex buyout. Where did Bristol-Myers get its blockbuster I-O med Opdivo and fellow immunotherapy Yervoy? This $2.5 billion deal. “Best merger ever,” according to one comment. “Where would BMS be without those two drugs?” said another.
- Eli Lilly - ImClone buyout. Back in 2008, Eli Lilly agreed to pony up $6.5 billion for ImClone Systems, which brought along a handful of meds that would later become top performers and new launches, including the cancer drug Erbitux and the newer med Cyramza. “Three drug launches (Cyramza, Portrazza and Lartruvo) from transaction + revenue from Erbitux + pipeline of potential agents + biotech manufacturing capabilities,” one backer noted.
- Gilead Sciences-Pharmasset buyout. A whopping $11 billion deal that raised eyebrows at the time, the Pharmasset deal brought a suite of hepatitis C meds that have since brought in blockbuster sales for the now-$30 billion Gilead. “ROI was huge!” one commenter enthused. “Duh,” said another one, as in, of course this is one of the best deals of the decade. “What seemed crazy turned out to be brilliant,” said a third.
- GlaxoSmithKline - Novartis swap. GSK sent its oncology drugs to Novartis in exchange for the Swiss drugmaker’s vaccines, and they teamed up in a consumer health joint venture. Glaxo has since made more hay with those vaccines, and with the GSK cancer meds, Novartis cemented itself as a leading company in the field. “[I]t was counter to market consensus for GSK” at the time, a reader pointed out. “[A]nalysts were insisting that oncology and I-O was the way forward, but as some recent trial results have shown, that is still a gamble as we don't know which ones will or won't work.”
- Merck - Schering-Plough. This $43 billion deal brought "PD-1 hidden jewel" in Keytruda, the now-blockbuster immunology med. "Failing research at Merck buttressed by excellent research at S-P," another reader argued. But really, the deal kudos came down to, as one commenter encapsulated, "one word: Keytruda."
- Pfizer - Wyeth. Criticized as a value destroyer, this $62 billion deal won more kudos than barbs from readers. The gist? “They got Zoetis spinoff, leading biotech drug Enbrel, well-performing consumer health again and a solid vaccine portfolio with blockbuster Prevnar.” The latter is now among its top sellers.
- Roche - Genentech. The Swiss drugmaker snapped up the stake in Genetech it didn’t already own, gaining control of the biggest-selling cancer drugs in the world. “Genentech continues to be a cash cow and a leader in marketed oncology drugs,” a reader noted. “Propelled dusty old pharma company into innovative biologics,” another said.
- Sanofi - Genzyme. The French drugmaker snagged Genzyme in a biologics grab that took it into rare diseases and multiple sclerosis. “Sanofi would be nowhere today without Genzyme. Bargain at $19B,” according to one comment. “Made them into a powerhouse. Got both Genzyme's scientific prowess as well as their venture capital arm,” said another.
- Valeant - Bausch & Lomb. If Valeant’s other deals delivered mixed results at best, Bausch & Lomb has been called its only crown jewel. “Think where they would be without B&L portfolio,” we heard. Valeant’s CEO now won’t rule out selling the unit to raise cash, but it’s likely to try to hold onto it if it can.
Conversely, here are the nominees and background—plus reader assessments—for the worst deals of the past 10 years.
- Alexion - Synageva. “Dropped the anchor through the deck of a $20 billion yacht,” one reader said of this deal, which brought Alexion a recently launched med, Kanuma, which “fizzled” on launch. “What seemed crazy turned out to be crazy,” another reader decreed.
- AstraZeneca - MedImmune. This $15 billion deal drew fire at the time for its price, given the substance of MedImmune’s pipeline. “What new drugs has MedImmune produced in the 10 years since? A nasal flu vaccine that is now not recommended for use,” one reader pointed out, referring to FluMist and the CDC’s ruling against it.
- Bristol-Myers - Inhibitex. BMS snapped up Inhibitex for its lead hepatitis C drug, but soon after the $2.5 billion deal closed, the company wrote off that centerpiece med for a whopping $1.8 billion. “Complete write-off,” one reader pointed out. “$15 billion enormous price,” another said. “Dramatically overpaid for on-market products of negligible value and a pipeline that, still to this day, has delivered nothing.”
- Daiichi Sankyo - Ranbaxy Labs. After the Japanese drugmaker snapped up the Indian generics maker, manufacturing problems took Ranbaxy into a tailspin. Daiichi has since bailed out, selling Ranbaxy to Sun Pharma.
- J&J - Actelion. "Too expensive" is the gist of the criticism of this $30 billion deal, struck late last year after a contest with Sanofi. Actelion brought along its pulmonary arterial hypertension drugs Tracleer and Opsumit, a new area for J&J. “Where is the growth?” one reader asked. (Though to be fair, it also won a nomination in the best category, in faith that J&J could make it work.)
- Merck - Cubist. Merck bought the anti-infective drugmaker partly for its blockbuster antibiotic Cubicin, which took a patent hit immediately afterward. A new antibiotic, Zinplaza, faces competition not only from other drugs but also potential vaccines, and analysts aren’t expecting much. “Lack of performance of acquired assets,” one comment said, summarizing the rest.
- Merck - Idenix. In an outcome similar to Bristol’s with Inhibitex, Merck bought Idenix and its hepatitis C med uprofosbuvir for $3.85 billion only to write off the transaction to the tune of $2.9 billion. The company "effectively spent $3.9 billion for an asset it now estimates is worth $240 million."
- Novartis - Alcon. Anyone keeping track of Novartis lately knows the eye care business Alcon has fallen far short of the payoff ex-CEO Daniel Vasella predicted when he engineered the two-stage buy. “Too complex, integration nightmare, no value created,” according to one comment. Another: “Deal draped an anchor around Novartis top and bottom lines.”
- Pfizer - Medivation. This deal, which brought along the prostate cancer med Xtandi and the forthcoming PARP inhibitor talazoparib, was sealed for a $14 billion price after an intense bidding war. Xtandi has since seen some data setbacks, and the cost came in for criticism here. “Overpaid by a large amount,” was the essential message from readers.
- Pfizer - Wyeth. Proof that beauty is often in the eye of the beholder, this megadeal has plenty of detractors. “Most disruptive,” one comment said. More harsh: “In its quest to manage EPS, Pfizer has single-handedly destroyed more innovation than any company in history. Wyeth is only the tip of the iceberg.”
- Teva - Allergan generics. With this $40 billion deal, Allergan was a clear winner, some (but not all) readers argued. Teva, not so much. “Myopic business bet with amateurish damage control,” one said. “Hugely overpaid,” said another. And another? Simply “disaster.”
- Valeant - Anything but Bausch & Lomb. “Limited benefit to portfolio,” said of Salix. “Goodbye Pearson,” another commented, referring to Michael Pearson, the former CEO and architect of its growth-by-M&A strategy.
Now’s your chance to vote for your own favorites. A note on the nominations, in case you’re wondering why yours didn’t make the final ballot. We culled them to focus on those with multiple votes. You have till Monday, Aug. 21 at noon to vote, and the results will appear later this month.