With Valeant Pharmaceuticals ($VRX) forking over $8.7 billion for eye-care giant Bausch + Lomb and Amgen's ($AMGN) $10.4 billion deal for Onyx Pharmaceuticals ($ONXX), this could be a comeback year for pharma M&A, even as the drug approval rate remains healthy.
According to a new half-year review from EvaluatePharma's EP Vantage, there was $29 billion worth of deals in the first half of 2013. Author Lisa Urquhart points to the Valeant deal and Actavis' ($ACT) $8.5 billion acquisition of Warner Chilcott ($WCRX) as the key deals of the 6-month period. If the pace continues, she says, 2013 could have its best year since 2010, although a far cry from 2009, when there were 170 deals worth $152 billion. There actually have been more deals by number each year since 2009, but values have been far less. There were 183 deals announced last year, but they were worth only $43 billion, the report points out.
Urquhart says the trend is looking good for the second half of the year despite the dollars that mid-range biotechs appear to be looking to bring. She sees Xofigo in cancer, Kalydeco in cystic fibrosis or Opsumit in pulmonary hypertension as possible takeover candidates. If Amgen completes its deal for Onyx and Perrigo gets its $8.6 billion buyout of Elan ($ELN) complete, then the second half has a chance of powering M&A to the best in three years. She sees mega-deals, however, "largely off the table" for the year.
The report points out that new drug approvals are nearly tracking the much-improved rate of last year, with 17 approvals by June 30, two more since and 19 in the hopper for the year. Based on revenue forecasts, the drug with the most potential in that group approved so far is Biogen Idec's ($BIIB) multiple sclerosis pill Tecfidera, and with good reason. For its first quarter on the market, the new multiple sclerosis pill racked up $192 million in sales. That's more than twice the $70-some million analysts expected.
If all of the 29 small molecules and 9 biologics get to the market in 2013, the 38 drugs could produce fifth-year U.S. revenues of $16.3 billion, even more than the $15.9 billion in projected fifth-year sales from last year, when more than 40 drugs were approved.
- download the report here