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Midsize pharma M&A

6411 akademikeren 31/3 2009 10:14

Bankers see more mid-sized drug industry deals

* Giant Pfizer, Merck, Roche buys may not be replicated

* Focus on bolt-on acquisitions to add products, diversify

By Ben Hirschler and Jessica Hall

LONDON/PHILADELPHIA, March 27 (Reuters) - Don't bank on too many more pharmaceutical mega-mergers.

Giant drug deals kept M&A bankers in business in the first three months of the year but the pharma diet for the rest of 2009 is likely to be smaller acquisitions valued from a few hundred million dollars up to possibly $20 billion.

Though mergers offer a quick way to rip out excess capacity, many obvious ones have now been agreed and the poor track record of 1990s mega-deals means potential predators are wary.

"While there have been some recent large pharma transactions announced, we don't expect there to be a huge wave of consolidation that sweeps the big-cap pharma space," said Jeffrey Stute, co-head of North America M&A at JPMorgan Chase.

"In mid-cap pharma, biotech and medical devices we do see continued activity," he added.

Healthcare dominated global mergers and acquisitions activity in the first quarter, with $120 billion of announced deals, according to Thomson Reuters data. [ID:nLQ562067]

Topping the table was Pfizer Inc's (PFE) $65 billion offer for Wyeth (WYE), followed by Merck & Co Inc's (MRK) $46 billion buy of Schering-Plough Corp (SGP).

The figures do not include Roche Holding AG's (ROG) $47 billion buyout of Genentech Inc (DNA), first initiated in July 2008.

The deal rush has sparked speculation of a further wave of consolidation among the world's top 20 drug companies. But, as the dust settles, many bankers are not convinced.

"I think we could be done for a while," said one healthcare banker at a European bank, who declined to be identified by name because he was not authorised to speak to the press.


Some of the obvious players that might follow Pfizer, Merck and Roche have already ruled themselves out of the game.

GlaxoSmithKline Plc (GSK), the world's second biggest seller of prescription drugs behind Pfizer, says it is not interested in large-scale M&A, while Swiss giants Novartis AG (NOVN) and Roche are busy digesting Alcon Inc (ACL) and Genentech respectively.

France's Sanofi-Aventis SA (SASY), often tipped as a buyer of smaller partner Bristol-Myers Squibb Co (BMY), remains a wild card.

But Sanofi's new Chief Executive Chris Viehbacher says his focus is on deals below $15 billion and his current partnership with Bristol is "sufficient" for now.

That does not mean acquisition departments at Big Pharma companies are idle -- far from it.

Across the sector, top executives are more active than ever in scoping acquisitions that may help them deliver on growth as the industry grapples with the biggest patent expiries crisis in its history.

For owners of potential targets, including some cash-strapped private equity houses, 2009 could be a year in which to realise locked-up value.

Family-owned skincare company Stiefel Laboratories Inc has asked Blackstone Group (BX), which owns a minority stake, to seek offers for the company.

And Swiss-based Nycomed, owned by Nordic Capital and three other private equity firms, which had been considering an initial public offering, may also be bought by a larger group.

Rumours abound on other possible tie-ups. Shares in Botox maker Allergan Inc (AGN), for example, shot up this week on talk Glaxo might snap up the business for some $20 billion.

Glaxo declined to comment but analysts were sceptical that it would try to buy the company.

"We're expecting more activity," said Simon Friend, global pharmaceutical leader at PricewaterhouseCoopers. "It may not be 'mega' but deals could still reach $10 billion, $15 billion or $20 billion."


The growing threat from generics, deteriorating research productivity and looming healthcare reforms in the United States -- the world's biggest and most profitable market -- have forced top drug companies rethink their strategies.

Mega-mergers are one way to take out capacity for companies like Pfizer, which faces the sector's biggest single loss of sales when its blockbuster cholesterol drug Lipitor loses patent protection in 2011.

Yet companies that tried giant takeovers in the last pharma M&A wave in the 1990s generally received poor scorecards from investors.

31/3 2009 13:14 Solsen 06422

March 31 (Reuters) - Eli Lilly & Co LLY.N is looking for acquisitions of as much as $15 billion, the drug maker's chief executive John Lechleiter told the Wall Street Journal in an interview.

"I got hungry again about three weeks after ImClone got closed" in late November, Lechleiter told the paper in an interview.

Lechleiter told the paper that Lilly wants to make more deals like its $6.5 billion takeover of ImClone, which added biotech cancer therapies already on the market and in development to Lilly's oncology line-up.

Lechleiter said he wants to diversify Indianapolis-based Lilly's product line-up to offset revenue declines some of the company's drugs will face in the next several years from competition with cheaper generics, according to the paper.

Lilly's best-selling drug, the antipsychotic Zyprexa, loses patent protection in 2011.

Lechleiter ruled out a mega-merger like Pfizer Inc's (PFE.N) $68 billion acquisition of Wyeth WYE.N and Merck & Co Inc's MRK.N $41 billion tie-up with Schering Plough Corp SGP.N, saying it's not clear major drug-industry mergers are an advantage, according to the paper.

"We're going to look for opportunities to be a bit more diverse pharmaceutical company," he told the paper. "We're not going to buy a medical-device company. We're not going to buy a diagnostic company."

Lechleiter did not tell the paper which companies he is looking at. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Lincoln Feast)

31/3 2009 13:17 tumult 06423

Og på dansk:
KØBENHAVN (Direkt) Den amerikanske medicinalgigant Eli Lilly er igen på jagt efter potentielle opkøb. Efter at have fordøjet ImClone Systems vifter selskabets topchef, John Lechleiter, igen med checkhæftet. Beløbet er allerede skrevet på, og der står 15 mia. dollar.

- Jeg blev sulten igen omkring tre uger efter ImClone handelen blev afsluttet i november sidste år, udtaler John Lechleiter til The Wall Street Journal.

Flere af de helt store spillere på medicinalmarkedet står til at miste patenter inden for den nærmeste fremtid, og det sender selskaber med pengepungen i orden på intensiv jagt efter nye produkter. Eli Lilly mister enerettigheden til Zyprexa, der står for en femtedel af omsætningen.

Konkurrenten Pfizers gigaopkøb af Wyeth for 68 mia. dollar bliver ikke gentaget, da Eli Lilly primært er på jagt efter mindre firmaer.

- Der er ikke noget bevis for, at store fusioner er en fordel. Der mangler ligeledes bevis for, at en konsolideret industri er en produktiv industri, siger John Lechleiter til The Wall Street Journal.

Firmaet er i stedet på udkig efter muligheder i 5 til 15 mia. dollar-klassen. Lilly er i særdeleshed interesseret i at udvikle sine dyrevelfærdsportefølje og kigger også efter muligheder inden for bioteksektoren.

- Vi kommer til at kigge på muligheder, der kan gøre os til et diversificeret medicinalfirma, slutter topchef John Lechleiter fra Eli Lilly.

Jeg forstår simpelt hen ikke hvorfor Genmab handles til under 210 nu hvor accept kan komme hvornår det skal være.

31/3 2009 13:22 akademikeren 06425

Hej Tumult, Jeg deler din manglende forstå det ville jeg nok også hvis den lå i 310

31/3 2009 13:28 tumult 06427

Vi må trøste os med, at det er under næsten ikke eksisterende omsætning, så den kan også hurtigt stige.

31/3 2009 14:08 Stinker 06429

Mens vi venter på køberne og tålmodigt trøster os med, at der heller ingen sælgere er, så kan man måske få lidt tid til at gå med fortolkningen af målet om at "udvikle sine dyrevelfærdsportefølje" (sakset fra ovenstående).

31/3 2009 14:13 tumult 06432

Jeg forstår det heller ikke, men måske kan dyr også få kræft.

31/3 2009 14:28 akademikeren 06435

Animal health er lidt et buzzword faktisk. Det er et kæmpe markedet, der bare blive større og større....

31/3 2009 17:58 tumult 06443

ENS købte lige 9000 stk i slutauktionen til 212, det tegner godt,- vores bønner er hørt.