Bristol-Myers Squibb Company, Pfizer Inc., Merck & Co., Inc. Ready to Buy Again; $10 Billion Deals Seen Returning in 2013

Published: Jan 08, 2013

Get ready for the return of the $10 billion-plus drug deal. Pharmaceutical companies including Pfizer Inc. (PFE) and Bristol- Myers Squibb Co. (BMY) have spent the last several years digesting earlier acquisitions, refocusing their product development and setting aside cash in anticipation of expiring patents. Now, the expectation is they’re ready to start buying again. Led by Pfizer, in New York, and Whitehouse Station, New Jersey-based Merck & Co. (MRK), five of the largest U.S. drugmakers had more than $70 billion in cash, near cash and short-term investments at the end of the third quarter. “We’re through many cost-cutting programs, restructurings and portfolio arrangements,” said Henry Gosebruch, managing director of health-care mergers and acquisitions at JPMorgan Chase & Co. (JPM) “When you put that together with record levels of cash available and improving, but still moderate R&D productivity, we think there will be more big pharma M&A activity in 2013.” Johnson & Johnson (JNJ), Abbott Laboratories (ABT), Sanofi (SAN), Pfizer and Merck have already shown interest in one purchase that may top $10 billion: Bausch & Lomb Inc., the eye-care company, is for sale by Warburg Pincus LLC. The private equity firm is seeking at least $10 billion for the business and those companies may be bidders, according to people with knowledge of the matter. This week will set the year’s dealmaking agenda at JPMorgan’s annual health-care conference in San Francisco. Almost 8,000 attendees and more than 400 companies will gather to make public presentations, have one-on-one meetings and get a sense of available and competing assets.

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