In 2014, pharmaceutical companies announced $234 billion in acquisitions, almost triple the volume recorded in 2013. Appetite for deals has continued this year, with the sector's largest acquisitions – those valued in excess of $1 billion – worth a combined $315 billion.
One deal stands out in particular. Nevertheless, despite the eye-watering value of Pfizer's recently proposed acquisition of Allergan, one could argue the deal is far from revolutionary. Pfizer has been built on a series of acquisitions over the past 15 years and its intention not to deviate from this strategy was telegraphed through last year's failed pursuit of AstraZeneca. If nothing else, Pfizer's strategy is a bold one, given US Congress' scrutiny of tax-inversion practices, but many – such as Bernard Munos, writing for Forbes – have argued it is also a flawed one.
The closest Pfizer may come to delivering the revolution that Munos argues is necessary, could be a split of the company later this decade. The acquisition of Hospira – for $17 billion, announced in February – appears designed to facilitate this by strengthening the status of Pfizer's established products business as a future standalone entity. Post-Allergan, Pfizer says such a strategy is still viable but may take more time.
Although industry M&A momentum has been maintained in 2015, Pfizer's acquisition of Allergan does of course remove one of the sector's most prominent acquirers from the game. The company's last significant activity was announcing the acquisition of Kythera for $2.1 billion in June, but had previously utilised transformational M&A over the past few years. Indeed, it is perhaps fitting that Pfizer and Allergan are now on the cusp of becoming one .
Valeant Pharmaceuticals has also seen its M&A wings clipped by recent events (and a significant decline in share price). Growth through an aggressive acquisition strategy now appears much less feasible, and it may take some time for the purchase of Salix Pharmaceuticals ($11.1 billion; announced March) to be followed by a similarly sized deal.
If Allergan and Valeant spearheaded specialty pharma's addiction to M&A in 2014, Teva shareholders spent much of last year watching and waiting. However, by announcing in July the $40-billion purchase of Allergan's generics business – a deal unaffected by Pfizer's subsequent acquisition of Allergan – Teva has provided a clear roadmap on where it sees its future (in the process Teva abandoned efforts to acquire Mylan for a similar price). Similarly, its acquisitions of Auspex Pharmaceuticals and Rimsa showcase commitment to innovative R&D and geographical expansion of its generics business, respectively.
Another standout deal of 2015 is AbbVie's acquisition of Pharmacyclics. At $21 billion, the cost of the transaction has been heavily scrutinised, particularly as Pharmacyclics' lead compound Imbruvica is already half-owned by Johnson & Johnson (a rival bidder to AbbVie). Nevertheless, AbbVie management have made bold predictions for Imbruvica and required a brave move given the company's dependency on Humira revenues .
Notable mid-sized deals in 2015 include Alexion Pharmaceuticals' acquisition of Synageva, through which it sourced the recently approved Kanuma franchise and Celgene's acquisition of Receptos. Shire has spent a combined $11.7 billion to acquire Dyax and NPS Pharmaceuticals, but reportedly remains committed in its pursuit of Baxalta; a deal that will cost in excess of $30 billion.
Indeed, as we approach the end of the year, a few notable M&A rumours and reports are in circulation. AstraZeneca confirmed earlier this week it has opened negotiations with privately held Acerta Pharma, while Sanofi and Boehringer Ingelheim have announced they are discussing a potential asset swap. AstraZeneca's recent acquisition of ZS Pharma, to gain access to the hyperkalaemia treatment ZS-9, has also prompted considerable speculation that rival hyperkalaemia specialist Receptos could be a buy-out target.
Maintaining its 'string of pearls' strategy, Bristol-Myers Squibb has continued to make acquisitions at the lower end of the value spectrum; albeit to access earlier-stage products and technologies, which in some cases key opinion leaders are already enthusiastic about (ViewPoints: Key opinion leaders enthused by IPF drug acquired by Bristol-Myers Squibb earlier this year)
