Mega-deals were few last year, but pharmaceutical deal-making hit record levels. Nearly 2,000 transactions were recorded in 202 with a value of almost $200 billion.
One in five deals involved some aspect of COVID treatment or prevention, though these accounted for less than 3% of the total deal value,” says a new report from the biosciences intelligence group Cortellis. “Consistent with the historic trend, oncology remains the most attractive therapeutic area for deal making.”
A blockbuster year for biopharma deal making says that 2020 “ended up being a solid year for the biopharmaceutical industry. Records were broken by financing transactions, and several deals and M&As fell within the highest values on record.”
The biggest M&A deal was AbbVie’s $63 billion acquisition of Allergan. Though it closed during the year, the purchase was announced well before the SAR-CoV-2 virus first appeared. A second mega-deal — AstraZeneca’s buyout of Alexion Pharmaceuticals for $39 billion – was announced in December but won’t close until late this year.
However, most of the 147 M&A transactions were smaller, collectively totaling $181.3 billion, far below the banner $256 billion in 2015 and 19% below 2019. The report says “About 82% of the M&As were “bolt-ons” or those in which an acquirer was attaching itself to needed technology. The rest were financial, expansion and mega-deals.”
Though M&A activity was slower than in the past, the1,580 financing transactions were 42% higher than 2019. According to the report, “Collectively, global public and private biopharmaceutical companies raised approximately $134 billion, which is almost double the previous record of approximately $69 billion set in 2015. It is also greater than the combined amount generated in 2018 and 2019.”
The largest share of the global financings (70%) went to US companies, with firms based in California and Massachusetts capturing $34.1 billion and $26.8 billion, respectively. New York trailed the two leaders with $6.7 billion.
Summarizing the year, the report points to the “culture of collaboration that developed between competitors” driven by the need to develop COVID treatments and vaccines.
“It will be interesting to see whether this newfound enthusiasm for cooperation can be adapted to tackle other major unmet medical needs. Continued deal-making can only strengthen this collaborative spirit within the biopharma ecosystem, benefiting shareholders and patients alike.”