A Perspective On Biopharma's Record M&A Run In 2019

This year was a watershed one for biopharma M&A, with several multibillion-dollar deals announced thus far.

M&A activity in 2019 kickstarted with a big deal. Bristol-Myers Squibb Co BMY agreed to buy Celgene for $74 billion in cash and stock, and the deal was consummated in late November — although there were several nervous moments en route to regulatory clearance.

Mega Deals, Record Numbers

The number of U.S. pharma and biotech deals grew year-over-year from 365 in 2018 to 484 by early November 2019, with the size of the year's deals being the noteworthy aspect, MarketWatch reported, citing Dealogic.

M&A transaction value in the sector totaled $342 billion — the highest since 1995, when Dealogic began tracking deals.

M&A volume reached $190 billion globally in the first half of 2019, higher than the full-year numbers many of past years, according to data compiled by HBM Partners.

Source: HBM Partners

Related Link: 12 Biotech Stocks Primed For A Short Squeeze

Key Takeaways

The main motives for biopharma M&A deals are the quest for reinvigorating growth through product innovation, compensating for lost revenue from patent expirations and unlocking synergies.

Apart from mega-sized deals, bolt-on acquisitions of start-ups were also common in 2019.

Merck & Co., Inc. MRK made the $300-million purchase of Immune Design; the $1.05-billion buy of Peloton Therapeutics just ahead of its planned IPO; the $773 million spent on privately held Tilos Therapeutics; and the recently announced $2.7 billion deal to buy ArQule, Inc. ARQL. 

Oncology, specifically immuno-oncology, was another hot therapeutic area that attracted interest, as evidenced by the Celgene deal and Eli Lilly And Co LLY's Loxo purchase.

Apart from buyouts, several multibillion-dollar oncology partnerships have also been struck, such as AstraZeneca plc AZN payment of up to $6.9 billion for DAIICHI SANKYO/S ADR DSNKY's lead antibody drug conjugate [fam-] trastuzumab deruxtecan, or DS-8201, which is being developed for multiple HER2-expressing cancers.

After Novartis AG NVS's 2018 purchase of AveXis, which brough the spinal muscular dystrophy treatment Zolgensma into its stable, the gene therapy deal flow continued in 2019.

Roche Holdings AG Basel ADR RHHBY completed its acquisition of Spark Therapeutics Inc ONCE.

ASTELLAS PHARMA/ADR ALPMY recently announced a deal to buy Audentes Therapeutics Inc BOLD.

Speculation is rife that many gene therapy names with advanced pipeline candidates could be ripe for buyouts.

Companies specializing in other emerging therapeutic areas such as RNA interference-based therapies were also in the spotlight in 2019. 

Novartis was lured by The Medicines Company MDCO's lone pipeline asset, inclisiran, which is a small interfering RNA therapeutic candidate that has the potential to lower LDL-C.

Sarepta Therapeutics Inc SRPT entered a licensing deal with Roche for its DMD gene therapy that could net the former up to $2.85 billion.

Notable Deals Of 2019