Biotech deals in the $1 billion (R6.7bn) to $5bn range are likely to be a sweet spot for pharmaceutical companies looking to bolster their pipelines through mergers and acquisitions in an increasingly tough environment, according to Ernst & Young.
Big pharmaceutical firms were likely to be the main buyers, but they might face competition from larger biotech firms for attractive targets, Glen Giovannetti, the global biotechnology leader at the consultancy, said in an interview.
“There are not many targets above $10bn,” Giovannetti said.
“I think there is an interesting space between $10bn and $20bn, which is a pretty sizeable deal, but it’s different than $20bn and above. I think you could see some (deals) between $10bn and $20bn although there aren’t many targets in that space. You will see a lot more in the $1bn to $5bn range.”
Britain’s Shire, worth about $17bn, has long been rumoured to be an acquisition target.
Pharmaceutical and biotech companies alike are looking to shore up revenue streams and boost their product offerings as they battle healthcare reforms, tougher regulatory approval processes, patent expiries on top-selling medicines and less productive pipelines.
The Ernst & Young “Beyond Borders” global biotechnology report 2011 highlighted that biotech groups were having to produce more effective medicines with fewer resources as they faced increased competition for financing. – Reuters