Expanding global reach drives M&A activity in pharmaceutical sector

M&A activity in the pharmaceutical sector was focused on expanding global reach by increasing presence in other regions. In line with the above trend, Merck agreed to acquire Sigma-Aldrich, a US-based life science and high technology company, for $17 billion. This acquisition would allow Merck to enhance position in life science industry and expands Merck Millipore’s global reach, increasing its presence in North America and adding exposure to Asian markets. The additions of drug production and validation would complement Merck Millipore’s existing products and capabilities.

Figure: Venture financing trend analysis

Source: Medtrack

In another key deal, Acorda Therapeutics agreed to acquire Civitas Therapeutics, a US-based biopharmaceutical company, for $525 million. This acquisition adds an exciting product candidate, CVT-301 to Acorda’s pipeline that addresses a significant unmet need in Parkinson’s disease. This transaction also leverages Acorda’s existing development and commercial capabilities and creates an opportunity to develop a global presence.

In addition, Civitas’ ARCUS technology adds a proprietary platform with the potential for future development opportunities. M&A activity in the pharma sector remain steady in volume and increased in value terms, when compared to the average of the previous six months’ (March 2014 – August 2014). According to Datamonitor’s Medtrack database, the pharma sector recorded 27 M&A transactions in September 2014, against the previous six months’ average of 27.6 transactions. In value terms, the sector recorded deals worth $20.5 billion, against the previous six months’ average of $17.3 billion.

Figure: M&A (including private equity) trend analysis

Source: Medtrack

The Indian pharma sector witnessed five deals during September 2014, against the average of one deal over the previous six months. Notable among them is Strides Arcolab’s acquisition of Shasun Pharmaceuticals for approximately $200 million. This acquisition would allow Strides to strengthen its growth, enhance its finished dosages portfolio and accelerate product filings with a combined R&D strength of over 400 personnel.

Venture funding

Companies in the pharma sector raised $157.4 million during Sep 2014, against the previous six months’ average of $268.1 million. In terms of volume, the sector recorded 18 venture funded deals, when compared to the previous six months’ average of 14 transactions.

Notes

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Definitions:
1. Deal value trend is based on transactions where associate values have been disclosed.
2. Trend analysis excludes rumoured and terminated deals.
3. Value and volume analysis excludes private equity exits.

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