In January and February, the value of deals in the United States alone totaled $146 billion.
The hunt for the next blockbuster drug amid significant competition is driving acquisition activity by big pharma and biotech companies, and they aren’t afraid to pay big bucks for their deals. According to Dealogic, the total value of deals for biotech and pharmaceutical companies in the United States was $146 billion in just the first two months of 2019 –– more than the value of all of the deals announced in each of the three previous years and 40% of all takeover deals in the United States in the current year.
Acquisition of new technology and potential pipeline candidates is attractive because, even with higher deal prices, the time it takes to get a drug to market can be significantly lower than developing new drugs in-house.
Examples of deals include Bristol-Myers Squibb’s acquisition of Celgene for $81 billion, Eli Lilly’s purchase of Loxo Oncology for approximately $8 billion, and Roche’s decision to purchase Spark Therapeutics for $4.8 billion. In these three cases, the buyers paid 52%, 74% and 164% premiums on the stock prices of their targets, respectively. On average, Dealogic reports that purchases are paying 120% above where the target biotech and pharmaceutical company’s shares had traded over the previous 30 days.