The global pharma and biotech industry started out with a bang in 2014 with the sector enjoying an environment with healthy IPOs and active mergers and acquisitions (M&A). The biggest acquisition of the year and perhaps for many years to come was attempted by Pfizer when it placed a bid of £69billion ($118 billion) for pharma giant AstraZeneca, which it declined. That however didn't dampen the market as more IPOs and M&A continue to make news. According to a new report by Frost & Sullivan titled, "A Rise in IPOs Revive Investments for the Global Pharma and Biotech Industry" the industry is on the upswing after years of low private equity and venture capital (PEVC) investments.
The report highlights the global healthcare industry during 2008-2010 recession years as well as the very sharp decline of investments and deals after 2010 which lasted until 2013. In 2013 the pharmaceutical, biotechnology and healthcare equipment sectors saw the lowest number of PEVC deals in the industry from 1063 in 2010 to 480 in 2013. However, 2014 look to provide ample opportunities for investors in an industry that still delivers better returns compared to other markets.
"PE deals in the pharmaceutical sector have been relatively stable over the post-recession period whereas activity in the biotechnology segment began to decrease after reaching its peak in 2010, due to the uncertainty caused by healthcare reform in the U.S., long incubation periods, and delayed approvals. VC deals across both these sectors also started to plummet from 2011 due to risks associated with regulatory uncertainty, long gestation periods, and increased cost of production," said Frost & Sullivan Financial Analyst Dr. E Saneesh.
According to Dr. Saneesh, oncology is one of the biggest drivers in the industry followed by anti-infective drugs and pharmaceutical contract laboratories. Technology is also playing a big role with close to 180 venture capital firms invested in mobile health care technology in 2013.
Some of the M&As and IPOs making news are:
The acquisition of Merck & Co.’s consumer health business for $14.2 billion by Bayer—making the company the largest OTC leader in North America.
Testosterone Biotech Clarus Therapeutics files for $86 million IPO
Fremont-Based Ardelyx Inc. files for $69 million IPO
Animal Health Company Parnell Pharmaceuticals Holdings files for $58 million IPO
ZS Pharma Swings for $86 million IPO
San Diego's Ambrx, Inc. Files for $86 million IPO
Santa Clara's ProteinSimple files registration statement for proposed IPO
San Diego's Lumena Pharmaceuticals files for $75 million IPO
Massachusett's Syndax Pharmaceuticals Inc. plans $69 million IPO
The industry is going through an avalanche of patent expiries which is forcing many to liquidate these assets. As patents expire, the revenue companies depend on declines dramatically, and the hope is the infusion of cash derived from these sales will deliver new medications in the very near future, whether it is through development or acquisition.
Edited by
Maurice Nagle
