An $11 billion (8.12 billion pounds) burst of biotech bids in just four days has fuelled expectations of a 2018 surge in life science deals as large drugmakers shop for promising assets from smaller rivals.
Separate reports on Monday by consultancy EY and law firm Baker McKenzie both predict a significant rise in mergers and acquisitions (M&A) this year, helped by U.S. tax changes that may lift big companies’ appetite for deals.
Celgene’s up to $7 billion agreed takeover of Impact Biomedicines, Novo Nordisk’s $3.1 billion offer for Ablynx and Takeda Pharmaceutical’s plan to buy TiGenix for $630 million have already got 2018 off to a flying start.
This follows a relatively subdued 2017, when total life sciences M&A totaled around $200 billion, dominated by Johnson & Johnson’s $30 billion purchase of Actelion and Gilead’s $12 billion acquisition of Kite.
EY is confident this year’s deal value will exceed $200 billion, given companies’ increased financial firepower and balance sheet strength. There is also substantial pent-up demand, with 60 percent of life sciences executives surveyed in October 2017 planning to actively pursue M&A in the next 12 months, compared with 46 percent in April.
Baker McKenzie, meanwhile, predicts global healthcare M&A could rise 50 percent in 2018, with North America accounting for well over half of transactions.
Driving the demand is the increasingly pivotal role of biotech firms in discovering the drugs of tomorrow.
“I believe you will see a higher proportion of innovation at an industry level and also at Novo Nordisk coming from external resources,” Novo’s Chief Financial Officer Jesper Brandgaard says.
“Ablynx is an example of strong technology development occurring in a smaller biotech setting, with considerable speed and a lack of some of the bureaucracy you can get at large pharma companies.”