Pan European M&A at record levels in 2018

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HBM Pharma/Biotech M&A Report 2018

Analysis of Biopharma M&A in 2018 (and previous years)

Key Findings

  • Worldwide biopharma M&A volume of completed deals (including the $59 billion Shire/Takeda deal1) reached $149.3 billion in 2018 (up from $75.9 billion in 2017). These numbers include contingent payments and as well as asset deals and sale of business units.
  • Besides the widely commented Shire/Takeda deal, there were only two further transactions over $10 billion: GlaxoSmithKline bought out Novartis’ stake in their consumer health joint venture for $13 billion and Sanofi acquired US-listed hemophilia company Bioverativ for $11.6 billion.
  • US deal volume (based on location of target company/business) in 2018 rose to $48.7 billion (up from around $30 billion in 2017).
  • In Europe the Shire/Takeda deal lifted deal volume to $97.3 billion, a number that is roughly twice as high as in 2017.
  • Average premiums paid for public biopharma companies rose to over 70%.
  • As in the years 2016 and 2017, M&A transaction volume outside of the US and Europe was modest in 2018 with a total deal value of only $3.3 billion.
  • Private deal making in 2018 was dominated by trade sales of innovation-driven and VC backed companies, both in the US and in Europe.
  • Return multiples to VC investors from M&A stayed at very high levels in 2018 with average multiples on upfront proceeds alone now surpassing 5x.

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Will this trend continue in 2019?

  • It is interesting to note that the valuation of assets in the EU remain lower then US.
  • We envisage that the IPO environment is going to be less favourable in the near future, which will be cushioned by increased VC liquidity. 
  • The dynamics around VC performance are changing with faster earn-back periods, and a larger portion financed by pharma-dollars.

Optimum’s Anne Marieke Ezendam will be reviewing these trends in a separate article. Please do visit our Insights for this piece in the coming weeks.