Pfizer deal indicates US pharma trend for targeted M&A: Fitch
24/08/2016 15:50
Fitch Ratings said in a report that consolidation continues as big pharmaceutical firms search for scale and efficiencies. However, as the number of new drugs in the pipeline increases, and manufacturers face manageable patent expiry risks, large acquisitions will become less necessary, it said.
The agency expects larger manufacturers to seek out individual therapeutics and smaller biotech companies through targeted acquisitions and partnerships designed to strengthen innovative drug portfolios.
Pfizer's deal announced this week is a good example. Medivation sells a prostate-cancer drug with significant growth potential in the oncology space and has two pipeline products. The all-cash deal for approximately USD 14 billion will be marginally positive for Pfizer's leverage as the company will fund the acquisition with balance sheet cash while acquiring EBITDA from a product that is already on the market and growing.
Pfizer's acquisition of Anacor in June is another example of a recent targeted acquisition. Anacor's eczema treatment crisaborole will be an important near-term asset for the company.
Other transactions include Bristol-Myers Squibb's acquisition of Padlock Therapeutics, which could expand its presence in the treatment of rheumatoid arthritis. In its acquisition of Glycostasis, Inc., Eli Lilly looks to develop a form of insulin that self-releases when a diabetic patient's blood-sugar level is too high.
