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The Lists: January 01, 0001 (Vol. , No. )

Top 10 M&A Deals of 2016

While 2016 Didn’t Reach the Heights Predicted, the Overall Value of Biopharma M&A Climbed

  • After 2015 turned out to be a strong year for biopharma mergers and acquisitions (M&A), several industry watchers expected 2016 to reach the stratosphere, and with good reason. The largest-ever deal in industry history was in the works, Pfizer’s planned $160 billion acquisition of Allergan, and the industry had seen the market for biopharma stocks recover from the near standstill of the 2007­–09 recession.

    Instead, an Obama administration crackdown on tax-slicing “inversion” mergers derailed the Pfizer-Allergan deal, while fears of price curbs on prescription drugs—concerns that President Trump has continued to stoke by railing against drug developers on Twitter—rattled investors enough to deflate stock prices, dampening company valuations enough to slow down the pace of deal-making. The overall value of biopharma M&A climbed, while the number of deals declined.

    That isn’t obvious from this year’s GEN List of the top biopharma M&A deals. Together those deals totaled $195.606 billion, down about 36% from the $303.926 combined value of the 10 transactions that made GEN’s List of top 2015 M&A deals. However, more than half of the 2015 total reflected the Pfizer-Allergan hookup; subtract that deal, and you have $143.926 billion, above which the 2016 figure represents a 36% increase.

    Also recording an uptick in the value of deals is the monthly Biotech Report of the Zephyr database of M&A, IPO, private equity, and venture capital deals. During January–November 2016 (December figures were unavailable at deadline), the total value of biotech M&A rose to $85.799 billion from $82.532 billion a year earlier, even as the number of deals shrunk to 1,231 from 1,336 in January–November 2015.

    At least one industry watcher expects M&A activity to accelerate in 2017. Earlier this month, EY predicted soaring M&A activity well past the $200 billion annual volume of deals seen last year, reasoning that continuing pressure by insurers to contain drug prices and expectations of business-friendlier policies from the Trump administration will drive new deals.

    Below is a list of 2016’s top 10 largest M&A deals disclosed in 2015 by drug developers, tools/tech companies, and CROs, ranked by deal value in U.S. dollars. Each acquired company is listed along with its acquirer or prospective acquirer, the price, the status of the deal, and the buyer’s stated reason for pursuing the deal.

  • #10. Acerta

    Acquired by: AstraZeneca

    Price: $4 billion, consisting of $2.5 billion upfront and $1.5 billion to be paid either on receipt of the first acalabrutinib regulatory approval for any indication in the U.S., or the end of 2018, whichever comes first. The agreement includes options that would allow AstraZeneca to buy the remaining 45% of shares in Acerta for approximately $3 billion.

    Deal status: Completion announced February 2

    Reasoning: Announced December 17, 2015, the deal gives AstraZeneca a 55% majority stake in Acerta, and thus access to Acerta’s irreversible oral Bruton's tyrosine kinase inhibitor, acalabrutinib (ACP-196), currently in Phase III development for B-cell blood cancers and in Phase I/II clinical trials in multiple solid tumors. On December 5, AstraZeneca announced positive preliminary results from the Phase I/II ACE-CL-001 clinical trial of acalabrutinib in subsets of patients with two difficult-to-treat forms of chronic lymphocytic leukemia (CLL).

  • #9. Anacor Pharmaceuticals

    Acquired by: Pfizer

    Price: Approximately $5.2 billion. Each outstanding share of Anacor common stock was converted into the right to receive $99.25 net in cash (without interest, but subject to required withholding of taxes).

    Deal status: Completion announced June 24

    Reasoning: Announced May 16, the deal was designed to expand Pfizer’s portfolio of inflammation and immunology drugs. Pfizer’s acquisition included Anacor’s flagship asset crisaborole, a differentiated nonsteroidal topical PDE4 inhibitor approved by the FDA on December 14, and marketed by Pfizer as Eucrisa™. Crisaborole is indicated for mild to moderate atopic dermatitis in patients two years of age and older. Pfizer has projected that crisaborole could generate peak-year sales of $2 billion or more. 

  • #8. Capsugel

    Acquired by: Lonza

    Price: $5.5 billion cash paid by Lonza to Capsugel owner KKR. Deal includes refinancing Capsugel’s $2 billion debt and raising up to CHF3.3 billion (about $3.3 billion) in new capital. Lonza has said that secured, committed, debt financing has been committed for the full acquisition amount from Bank of America, Merrill Lynch, and UBS.

    Deal status: Expected to close in Q2 2017

    Reasoning: Announced December 15, the deal “accelerates our healthcare continuum strategy by giving us broader exposure to the fast-growing pharma and consumer healthcare markets,” Lonza CEO Richard Ridinger said in a statement.

  • #7. Meda

    Acquired by: Mylan

    Price: $9.9 billion, consisting of a cash-and-stock offer for all Meda shares valued at $7.2 billion, as well as Mylan assuming Meda’s net debt.

    Deal status: Completion announced August 5

    Reasoning: Announced February 10, the deal was designed to expand Mylan’s portfolio of branded and generic drugs, as well as its presence in emerging markets. Other advantages, according to Mylan CEO Heather Bresch, included “significant accretion to Mylan's adjusted earnings per share, the opportunity for substantial synergies and further acceleration of our growth.”

  • #6. Stemcentrx

    Acquired by: AbbVie

    Price: Up to $9.806 billion, consisting of $5.806 billion upfront—$1.883 billion in cash, $3.923 billion in stock—plus up to $4 billion in additional payments tied to achieving regulatory and clinical milestones.

    Deal status: Completed June 1, when AbbVie

    Reasoning: Announced April 28, the deal was designed to strengthen AbbVie’s oncology pipeline with the late-stage small-cell lung cancer (SCLC) candidate rovalpituzumab tesirine (Rova-T).

  • #5. IMS Health Holdings

    Acquired by: Quintiles

    Price: Approximately $10.4 billion, based on the closing price of company shares on October 3. IMS Health shareholders received 0.384 shares of Quintiles common stock for each share of IMS Health common stock.

    Deal status: Completion announced October 3 when IMS Health merged with and into Quintiles, with Quintiles considered the legal acquirer in the deal. Quintiles continued as the surviving corporation, changing its name to Quintiles IMS Holdings.

    Reasoning: Announced May 3, the merger was designed to create one of the world’s largest providers of healthcare data, technology, and services solutions. 

  • #4. Medivation

    Acquired by: Pfizer

    Price: $14 billion

    Deal status: Completion announced September 28

    Reasoning: Announced August 22, Pfizer said the deal would strengthen its “Innovative Health” new drug business “and accelerate its pathway to a leadership position in oncology, one of our key focus areas, which we believe will drive greater growth and scale of that business over the long-term.” Pfizer also hopes Medivation’s candidates can help it build an immuno-oncology-focused portfolio combining immunotherapies with other cancer candidates usable in I/O combinations.

    The deal added to Pfizer’s cancer holdings the marketed prostate cancer drug Xtandi® and a pipeline that included talazoparib (MDV3800), now in a Phase III trial in germline BRCA (gBRCA) mutated breast cancer, for which top-line data is expected this year; and pidilizumab (MDV9300), a candidate licensed from CureTech that has been slated for development as a treatment for diffuse large B-cell lymphoma and other hematologic malignancies, such as multiple myeloma. 

  • #3. Baxalta

    Acquired by: Shire

    Price: $32 billion

    Deal status: Completion announced June 3

    Reasoning: Announced January 11, Shire said the acquisition would create what it called the global market leader in rare diseases and other specialized disorders. Shire has projected that the combined company will generate approximately 65% of its total annual revenues from its rare disease products—revenues the company has forecast as rising to more than $20 billion by 2020, with double-digit compound annual top-line growth.

  • #2. Actavis Generics

    Acquired by: Teva Pharmaceutical Industries

    Price: $38.8 billion, consisting of $33.43 billion in cash and approximately 100 million Teva shares valued at $5.3 billion. The deal’s final price is below the $40.5 billion price reported when the deal was announced in 2015.

    Deal status: Completion announced August 2, a day before Teva signaled it wanted to grow even bigger in generics by acquiring Allergan’s generic distribution business Anda for $500 million, a deal that Teva announced as completed on October 3.

    Reasoning: Teva said it aimed to “create compelling, sustainable value for (its) stockholders” through the Actavis Generics deal, intended to help build the company into one of the world’s top drugmakers, a goal the company sought to achieve in 2015 when it tried but failed to acquire Mylan.

  • #1. Monsanto

    Acquired by: Bayer

    Price: $66 billion

    Deal status: On December 13, Monsanto shareholders approved the acquisition, which is expected to close later this year. On January 11, the CEOs of Bayer and Monsanto met with President Trump in New York “to share their views on the future of the agriculture industry and its need for innovation,” Monsanto said in a statement to Fox Business, calling the meeting “productive.” Bayer CEO Werner Baumann and Monsanto CEO Hugh Grant told Trump that their deal would serve as an incentive to keep and create more jobs in the U.S., RT reported.

    Reasoning: Announced September 14, deal designed to create an agricultural biotech giant combining Monsanto’s expertise in seeds and traits, Bayer’s know-how in crop protection, as well as the biologics and digital farming knowledge of both companies.