Biopharma M&A got a big boost moneywise in 2019. The three largest—Bristol-Myers Squibb for Celgene, AbbVie for Allergan, and Amgen for Celgene’s psoriasis drug Otezla—together delivered more than $150 billion. Valued at $74 billion, the Celgene takeover also broke records to become the biggest pharma deal ever.
Oncology was still a popular theme, stringing through a whole year of big M&A headlines, from the combination of cancer bigwigs Bristol-Myers and Celgene, announced in January, to buyouts of earlier-stage companies, including Merck & Co.’s $2.7 billion ArQule deal and Sanofi’s $2.5 billion Synthorx takeover, both of which went public in December.
Scattered in between were Eli Lilly’s $8 billion buyout of Loxo Oncology, Pfizer’s $11.4 billion tie-up with Array BioPharma, and some major licensing deals such as AstraZeneca and Daiichi Sankyo’s potential $6.9 billion partnership on now-FDA-approved HER2-targeting antibody-drug conjugate Enhertu.
But one quite acquisitive company seems to have deviated from that trend, at least in 2019. After inking a couple of radiotherapy deals in 2018, Novartis shifted last year with deals in three different fields: It put down $9.7 billion for The Medicines Company to get its hands on PCSK9 cardiovascular drug inclisiran, shelled out $3.4 billion upfront for Takeda’s dry eye drug Xiidra, and quickly folded in IFM Therapeutics’ inflammatory disease-focused subsidiary IFM Tre in a deal worth up to $1.58 billion.
Gene therapy represented another hot topic last year. After Novartis took in AveXis and its spinal muscular atrophy gene therapy Zolgensma for $8.7 billion in 2018, Roche followed suit in 2019 with its star-crossed acquisition of Spark Therapeutics. Biogen immediately came up with its $877 million purchase of Oxford University spinout Nightstar Therapeutics for the latter’s ophthalmology gene therapies.
Pfizer, already in a multiprogram gene therapy collaboration with Sangamo Therapeutics, took a stake in French startup Vivet with an option to buy out the gene therapy biotech.
Then in December, Astellas revealed that it’s buying Audentes Therapeutics for $3 billion. The deal is set to give the Japanese pharma a gene therapy pipeline in neuromuscular disease. Commenting in a December note to clients, SVB Leerink analyst Joseph Schwartz said the deal may “signal big pharma’s optimism towards M&A and that the gene therapy sector remains an appealing hotbed for innovative and value-creating targets.”
It’s worth noting that both Spark’s $114.5-per-share and Audentes’ $60-apiece prices represent more than 100% premiums over the companies’ previous closing, showing their buyers' eagerness to branch into gene therapy.
Moving into 2020, U.S. life sciences companies’ CEOs still have a “high appetite” for M&A, a recent KPMG survey showed. But after a cash-flooded 2019, companies may be looking for smaller bolt-on acquisitions rather than megamergers, Bloomberg reported, quoting an investor note from J.P. Morgan analyst Chris Schott.
One company that we will be keeping an eye on for M&A activities in the years to come is Sanofi—both as a buyer and a seller. The French pharma’s newly minted CEO Paul Hudson just revealed a major shakeup that will see the company back away from struggling diabetes and cardiovascular disease areas. Some established medicines will land on the chopping board, just as Sanofi aims to spend “smart” on M&A and business development.
A big issue potential biopharma buyers will have to face in 2020, though—and perhaps beyond—is the extra scrutiny from the U.S. antitrust watchdog. For 2019, we know Bristol-Myers’ Celgene takeover, Roche’s Spark deal, AbbVie and Allergan’s merger, Elanco’s purchase of Bayer animal health, and the U.S. generics transaction between Aurobindo Pharma and Novartis’ Sandoz have all hit antitrust hurdles, with some of them still unresolved after extensive delays. As the presidential election draws near in the U.S., pressure from Capitol Hill on drug pricing might also translate into more roadblocks at the Federal Trade Commission.
As 2020 unfolds before us, then, we give you the largest biopharma M&A deals announced in 2019, ranked by their headline values. In the case of the merger between Pfizer’s Upjohn and Mylan, we used the $12 billion debt Upjohn will raise, with proceeds going to Pfizer.
Here we consider only straight acquisitions that involved drug companies. So, medtech deals such as General Electric selling its biopharma manufacturing services business to Danaher for $21.4 billion, and co-development and licensing agreements such as Gilead Sciences and Galapagos’ $5 billion collaboration, are not included. We also excluded Nestlé’s CHF 10.2 billion spinoff of dermatology specialist Galderma because it went to a group of private equity firms.