2019 was a banner year for billion-dollar life sciences M&A transactions. A wave of big-ticket transactions by global pharmaceutical companies drove life sciences M&A activity to its fourth-largest year on record in 2019, with aggregate deal value in the pharmaceutical, medical and biotech industry reaching $234.2 billion - almost double the value of deals announced in that same sector in 2018, despite the number of deals decreasing from 705 in 2018 to 519 in 2019. And, in general, we saw large pharmaceutical companies deploy substantial amounts of capital in 2019 to acquire innovative biotech companies that are advancing the development of novel therapies for oncology, orphan diseases and other unmet medical needs.
Year of the Life Sciences Mega-Deals
M&A transactions with eye-popping price tags solidified 2019 as the year of life sciences mega-deals, which included Bristol-Meyer Squibb's $74 billion acquisition of Celgene; AbbVie's pending $63 billion acquisition of Allergan; Takeda Pharmaceutical's $62 billion acquisition of Shire; Pfizer's $12 billion sale of its off-patent business to Mylan and $10 billion acquisition of Array BioPharma; Eli Lilly's $7 billion acquisition of Loxo Oncology; and Novartis' $6.7 billion acquisition of The Medicines Company. In fact, the Bristol-Meyer Squibb-Celgene transaction was the largest pharmaceutical M&A transaction (based on deal value) on record. Other notable deals that passed the $1 billion mark in 2019 included Vitrolife's acquisition of Parallabs for £1.9 billion; Audentes Therapeutics' sale to Astellas for $3 billion; Ra Pharmaceuticals' pending sale to UCB for $2.5 billion; and Synthorx's sale to Sanofi $2.5 billion. Whether the wave of mega-deals will continue remains to be seen. The general strength of the capital markets throughout 2019 provided biotech and pharmaceutical companies with access to capital and an ability to add cash to balance sheets to fund clinical development over a longer period of time, as well as alternative paths forward if the premium offered by the potential acquirer did not fully recognize the value of their assets. If, however, capital markets and the economy weaken in 2020, M&A transactions may be the only viable option for life sciences companies to access capital, in which case we would expect to see more M&A transactions by number, but they would likely be paired with lower purchase prices and/or more highly structured.
The Art of the Life Sciences Deal