2015 Was a Record Breaker for M&A in Pharma, Medical and Biotech with Deals Worth $575 Billion

2015 Was a Record Breaker for M&A in Pharma, Medical and Biotech with Deals Worth $575 Billion
January 14, 2016
By Joanne Finnegan, BioSpace News Staff

It was a year with lots of wheeling and dealing, as 2015 proved to be the second record-breaking year in a row when it came to mergers and acquisitions (M&A) in the pharmaceutical, medical, and biotech industries.

In 2015, there were 1,353 mergers and acquisitions reported within the industry, worth a total of $574.5 billion, according to Mergermarket’s Global Pharma, Medical & Biotech trend report for the year. That was a 51.1 percent increase by value, compared to 1,329 transactions recorded in 2014 that were worth $380.3 billion, according to the report.

The mergers and acquisitions in 2015 were dominated by what Mergermarket called “transformational mega-deals” (defined as a deal worth more than $10 billion) with nine transactions totaling $366.3 billion. That was a whopping increase by value of 96.6 percent compared with seven similar large deals in 2014 worth $186.3 million.

Some of the major deals announced in 2015 that boosted those numbers were U.S.-based Anthem’s acquisition of Cigna for $50.4 billion, Israel-based Teva ’s $40.5 billion acquisition of U.S.-based Allergan ’s generics business, and the $183.7 billion acquisition of Ireland-based Allergan by Pfizer , which was the largest deal on record for the industry.

The mergers and acquisitions in the sector last year were driven by corporate strategy to increase revenues through inorganic growth, tax- saving acquisitions, and absorbing research and development components from other pharmaceutical entities, the report said.

"This boom in [pharmaceutical, medical and biotech] activity is expected to continue into 2016, with high profile acquisitions aimed to expand portfolios and drive revenue growth showing no sign of slowing down," the report said.

Kirsty Wilson, Global Research Editor, Mergermarket, told BioSpace , “Smaller transactions could be the theme for 2016, especially as more Asian firms are becoming active in countries such as China and India. Large-scale transactions in the space was a theme for global M&A in 2015, and this year we will see firms digesting those deals. Tax inversions were another key driver, but with fewer suitable European targets for US companies and a US crackdown to keep companies domiciled at home, there is likely to be more mid-market activity rather than the mega-deals we have are now accustomed to.”

There was some major action in the industry towards the end of the year with the completion of 308 deals worth $240 billion in the fourth quarter—the highest quarterly value on Mergermarket record since 2001. That quarterly value far outpaced activity in the third quarter of 2015 when transactions totaled $152.5 billion.

Deals within the pharmaceutical sector drove overall activity within the industry, with 362 deals worth $395.7 billion. That was an increase of 90.4 percent over 2014 with 2015 transactions reaching their highest deal value and count on record, the report said. There were also slight increases in the medical sector, with transactions worth $156.8 billion, and the biotech sector where transactions totaled $22 billion—overall an increase by value of three percent and nine percent, respectively.

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