Mergers and Acquisitions Remain Key in Big Pharma's 2013 Playbook

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Reported by Annette Kreuger, Industrial Info Resources (Sugar Land, Texas)--In the absence of the avalanche of mega-industry mergers and acquisitions (M&A) seen in previous years, many pundits have proclaimed the end of that particular business tool as an essential component in Big Pharma's playbook. While the numbers in 2012 of both quantity and value were less than in years past, it is apparent that M&A plans remain a key factor for the industry. With 2013 barely under way, rumors are in the air of new deals in the offing.

Click on the image to the right for a listing of the 'Top Industry Mergers & Acquisitions Closed in 2012'

A recent report showed just how much cash Big Pharma has to spend. The top five companies, including Pfizer Incorporated (NYSE:PFE) (New York, New York) and Merck (NYSE:MRK), had more than $70 billion in cash, near-cash and short-term investments at the end of the third quarter of 2012. The key word does appear to be cash. And the most likely target currently in play is eye care giant Bausch & Lomb, with a price tag topping $10 billion.

A look back at 2012 reveals a handful of key transactions, with the majority focused on pharma chasing biotech. Bristol-Myers Squibb (NYSE:BMY) (New York, New York) (BMS) forked over $7 billion to snap up Amylin, with its eye on the lucrative diabetes market. A smaller deal by BMS bought Inhibitex and its hepatitis C pipeline for $2.5 billion.

Although brokered in 2011, Gilead closed in early 2012 on its $11 billion purchase of Pharmasset to grow its own hepatitis C portfolio. After an acrimonious beginning, GlaxoSmithKline (NYSE:GSK) finally closed the $3 billion deal to snap up Human Genome Sciences. Generics giant Watson Pharmaceuticals Incorporated (NYSE:WPI) (Parsippany, New Jersey) purchased Actavis for nearly $6 billion, seeking expansion into the global marketplace.

In addition to the billion-dollar deals making the headlines, there are scores of others under way, representing hundreds of millions of dollars in investments. One of the first of 2013 is the announcement by Allergan Incorporated (NYSE:AGN) (Irvine, California) of its intent to purchase MAP Pharmaceuticals (NASDAQ:MAPP) and its potentially lucrative migraine treatment for a reported $900 million. Allergan is betting on the drug Levadex to receive official approval from the U.S. Food and Drug Administration (FDA) by April of this year. Famous for Botox, used for both cosmetic as well as medical treatment, the company already had secured certain marketing rights to the drug in the U.S. and Canada.

Indeed, what would the pharmaceutical industry be without scandal? Federal securities officials were kept busy checking out insider trading cases throughout 2012, with no end in sight to succumbing to the lure of cadging some easy pharma bucks. The nefarious cast of traders included everyone from Hall of Fame baseball player Eddie Murray to top-level executives like Robert Ramnarine, who is BMS Assistant Treasurer for Capital Markets. The Ramnarine case was especially ironic, owing to the fact that a major component of his position with BMS was evaluating potential acquisition targets.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.