Valeant Chief Calls Recent Biotech M&A "Bit of a Bubble"

Published: May 22, 2015

Valeant Chief Calls Recent Biotech M&A
May 22, 2015
By Riley McDermid, Breaking News Sr. Editor

The scorching pace of deal activity in the healthcare sector has created a “bit of a bubble,” said Valeant Pharmaceuticals International, Inc. Chief Executive Officer Michael Pearson at a conference this week, renewing fears that biotech’s bull run might be nearing its end.

“There’s a deal frenzy going on. Some of these acquisitions are not going to work,” Pearson told the Bloomberg Canada Economic Series in Toronto on Thursday. “In terms of prices being paid for acquisitions, some of them make sense and some of them don’t make sense.”

There’s been over $95 billion of U.S. healthcare merger activity already in 2015, as healthcare and biotech have boomed over the last 13 months. Executives at all these companies have scrambled to keep up with the 73 percent more M&A activity this year, which has already seen over 245 deals.

That’s a pace that could be too fast to sustain, said Valeant’s CEO, who said the Canadian drugmaker is much more focused on solid, long-term deals, rather than fire sale prices.

“We’re consistently looking for good deals,” he said, adding Valeant tries to be “less cyclical on how we approach M&A than the industry as a whole.” Valeant is also very attracted to emerging markets, he told Bloomberg in an interview after his presentation.

“We like Asia,” he said. “Business is doing well. There’s a huge unmet need and incomes are going to continue to rise. We have been and we will continue to make acquisitions.”

Valeant also continues to focus on its home country, pouring $328 million into its Bausch & Lomb unit expansion for far, as it starts pulling up stakes down south.

“We are now exiting parts of North America and moving them to Canada because of the exchange rate, and also a lot of other pharmaceutical companies are moving out of Canada,” Pearson said.

“There’s a talented workforce and an overcapacity of workers,” he said. “We’ve tripled our workforce in Canada in the last three or four years.”

Will Mylan Buy Teva, As Predator Becomes Prey?
The complicated three-way takeover waltz being conducted between Pittsburgh, Penn.-based Mylan Inc., Israeli company Teva Pharmaceutical Industries Ltd. and Perrigo Company took another weird turn last week, after Mylan said that while it still views Teva’s unsolicited $40.1 billion bid as too low, it might want to acquire Teva itself eventually. Mylan Chairman Robert J. Coury made it clear that if Mylan is able to cement its deal with Perrigo, it might go shopping again—and this time to buy Teva, not be bought. With dealmaking heating up in 2015, we wanted to know your thoughts: Will perennial predator Teva wind up being prey?

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