2017 Through the Rear-view Mirror
On the pharmaceutical side, super-dimensioned M&A activity was somewhat more modest. Many of the deals were between players in the biochemicals segment or conventional drugmakers who wanted to enter the sector.
In the year’s biggest transaction by far, Johnson & Johnson, the world’s largest healthcare company, based in the US state of New Jersey, finally scored with Swiss biotechnology firm Actelion. It took the prize for $30 billion after a fierce battle punctuated by the unexpected entry of French drugmaker Sanofi, which the US knight successfully edged out. As part of the purchase agreement, J&J took an initial minority stake of 16% in the research arm spun off to Acetelion’s management and gained a stake in an interesting pipeline.
Analysts, however, called the purchase price expensive compared with industry takeovers of the earlier years, such as Pfizer’s acquisition of Medivation and AbbVie’s purchase of Pharmacyclics.
J&J agreed to pay more than 21 times Actelion’s estimated 2020 earnings per share.
US contract manufacturer Catalent agreed to buy contract development and manufacturing organization Cook Pharmica for $950 million in cash, boosting its position in the fast-growing biologics area.
This merger was one of several in a consolidating global contract manufacturing industry. A month earlier, Swiss fine chemicals and biologics producer Lonza acquired Micro-Macinazione, a contract manufacturer providing micronization of active ingredients for the pharmaceutical and fine chemical industries.
Also during 2017, Basel-headquartered Lonza also completed its acquisition of Capsugel, which it had proposed at the end of 2016. Lonza paid US private equity investor KKR $5.5 billion for all assets of the US company based at Morristown, New Jersey, and regarded as one of the leading producers of capsules for delivery of drugs and food supplements. It also agreed to refinance the acquired company’s debt.
US biopharmaceutical company Celgene said it would take a stake in China’s BeiGene and help develop and commercialize that company’s investigational treatment for tumor cancers. Following the transaction, BeiGene planned to acquire Celgene's operations in China and also license and assume commercial responsibility for the US company’s approved therapies in China.
German pharmaceuticals and chemicals producer Merck KGaA announced plans to divest its biosimilars business to compatriot firm Fresenius Kabi. Merck said it was shedding the business to focus on its pipeline of innovative medicines.
French drugmaker Sanofi agreed to buy Protein Sciences, a privately held vaccines biotechnology company based in Meriden, Connecticut, USA.
US pharmaceutical company Merck & Co announced plans to acquire Germany-based Rigontec, a pioneer in accessing the retinoic acid-inducible gene I (RIG-I) pathway as a novel and distinct approach in cancer immunotherapy. A Merck subsidiary was to make an upfront cash payment of €115 million to Rigontec’s shareholders, with additional contingent payments of up to €349 million agreed.
Gilead Sciences, on the lookout for a blockbuster drug to boost its portfolio, offered almost $12 billion to acquire compatriot Kite Pharma and gain access to Car-T, Kite’s cutting-edge chimeric antigen therapy treatment for cancer. The experimental treatment re-engineers white blood cells to attack cancer. Both companies are based in California.
Ahead of the shattering announcements of divestments and layoffs it saved up for the end of 2017, by that time under new management, Israeli generic drugs giant Teva earlier in the year completed its exit from the women’s health sector, unloading its contraception, fertility, menopause and osteoporosis products to CVC Capital Partners Fund VI for $703 million. Simultaneously, it sold its emergency contraception brands to Foundation Consumer Healthcare for $675 million.
Changes in shareholding parities
The UK pharmaceutical market’s largest player, GlaxoSmithKline (GSK), acquired an additional 26% stake in its Saudi unit, taking the company’s overall share in Glaxo Saudi Arabia Limited (GSAL) to 75%.
US pharmaceutical giant Pfizer divested its 49% stake in Hisun-Pfizer Pharmaceuticals, its Chinese joint venture with Zhejiang Hisun Pharma. As part of the plan, Sapphire I Holdings, which is indirectly controlled by private equity firm Hillhouse Capital, will acquire Pfizer’s shareholding.
US activist investor Bill Ackman pulled the plug on his Pershing Square Capital Management hedge fund’s loss-making engagement in Canadian drugmaker Valeant, which he had been trying to push to greater heights since 2015.
To read more about the important events of 2017, click on the links below.
- Part 1: The Rocky Road to Mega-mergers
- Part 2: Chemical Producers Lead M&A Activity in 2017
- Part 4: Distributors Proactive in M&A
- Part 5: New Projects
- Part 6: Shale Gas Fuels US Investment
- Part 7: Timid Awakening of European Investment
- Part 8: Asia sees ongoing investments
- Part 9: Trump Rolls Back Environment Rules
