Biotechnology M&A insight: Deals and strategies

Abstract

Biotechnology mergers and acquisitions (Biotech M&A) can help the industry's fully integrated players to increase in size and market value, boost the emerging players' efforts to reach full integration or allow horizontal players to survive cyclical financial crises. Analysis of 82 key deals between 1999–2003 showed a dollar value of biotech M&A well over US$45bn. This activity, mainly driven by a continuous move towards industrial specialisation, also revealed a widely segmented model with seven major M&A trends. Intersector activity involved 11 key deals between the biotech, the drug delivery (Bio2DD: biotech-to-drug delivery) or pharma sectors (P2Bio: pharma-to-biotech) with a value totalling US$9.7bn, and were driven either by the pharma players' need to expand their marketed portfolios or improve innovation, or the biotech sector's intention to advance management lifecycle or business diversification. Furthermore, intrasector activity included 18 agreements between fully integrated (Fbio2Fbio: fully integrated-to fully integrated biotech players) or fully integrated and emerging players (Fbio2EBio: fully integrated-to-emerging biotech players) valued at US$30bn, which were aiming to increase market value and sustain profitability. In addition, Datamonitor analysis has identified 53 deals with a value of US$5.3bn between emerging players (EBio2EBio), emerging and horizontal players (EBio2Hor: emerging-to-horizontal players) that targeted full integration, or between horizontal players to reach a higher level of innovation or larger customer base.