The acquisition of Par Pharma by rival Endo for $8 billion has many in the Pharma industry forecasting a continued M&A frenzy. The heightened activity for mergers and acquisitions also brings with it a challenge. More often than not, mergers fail to realize the full potential of their combined assets. To create value, mergers must follow a different pattern than historical cases, particularly in how their sales force is integrated.
How can Pharma organizations do this? The goal is to determine optimal sales force size, structure and allocation by product and across customers for the immediate future. The use of a strong analytic tool can help deliver a clear picture of the commercial operations. To this end, this week’s curation focuses on M&A activity in Pharma.
6 Articles Showcasing Pharma M&A on the Rise
1. The Pharma M&A Party is Still in Full Swing, as Endo Snaps Up Par
By Geoffrey Smith, published on Fortune
Endo’s generic drugs set to hit the market
While some experts are calling the new era in Pharmaceutical buyouts the “takeover boom,” Endo International’s buyout of Par, a generic drug maker, is positioning the company as one of the top drug giants. This purchase is in addition to Endo’s acquisition of another generics company, Aspen Holdings. Many of the drugs (about 33 percent) it now owns include those that are the first generic product going to market, positioning Endo to reap huge gains in revenue.
2. Royce Funds: What’s Driving M&A Activity In The Healthcare Space?
By Royce Funds, published ValueWalk
Healthcare and mid-size companies compete for M&A
Biotech and Pharma industries have seen a lot of M&A action over the years. Now, corporations are replete with cash or access to capital, making them turn outward to the possibility of snatching up small, growing healthcare companies. Specifically for medical device companies, the prospect of M&A in particular will continue to see growth. Not only are large Pharma companies searching for M&A, but mid-size organizations with a market cap of up to $30 billion are also in the running.
3. BioPharma M&A: Capital Efficiency Drives Returns
By Bruce Booth, published on Forbes
Efficiency make sense when funding M&A
Companies pursuing M&A will be successful if they follow one principle: employing discipline when it comes to efficiently pursuing equity capital. There is a balance to achieving viability and lasting revenue returns. It involves finding the right accord between over-capitalizing and missing the market window, and under-funding a company, which leads to missing milestones. Pharma companies that are smart with their funds can meet the potential for high returns with an M&A.
Pharma spending rising fast – and expected to continue
The M&A boom in Pharma is not to be overstated. Within just the first quarter, 35 M&A deals closed for Pharmaceutical, biotech, medical device, contract-research and diagnostic organizations. In comparison, the amount spent on M&A in 2014 ($150.1 billion) pales to first-quarter spending in 2015, $166.3 billion. Experts expect this feverish spending to continue, while larger organizations look for effective smaller companies in which to invest, to compensate for the expiring patents in their own drug arsenals.
By Ciaran McEvoy, published on Investor’s Business Daily
U.S. Pharma looking to Europe for value investments
Cross-border M&A by U.S. Pharmaceutical companies has reached nearly $6 billion. In fact, America-driven deals are nearly half of all M&A conducted so far in 2015. In many of these deals, U.S. companies are looking to the European market to source M&A targets. As evidence, 2015 has seen nearly 90 percent of overseas activity taking place in the European markets, an increase of 68 percent from just last year. The most popular countries for the activity are the U.K. and Switzerland.
6. US Pharmaceuticals and Life Sciences Deals Insights Quarterly Q1 2015
Published on PWC
PwC’s review of Q1 2015
Pharmaceuticals and life sciences in 2015 show heightened activity, increased transactions and higher deal values. Industry trends include: divestitures, as recent M&A activity will force companies to effectively manage their portfolios; generic shake-ups, as traditionally focused generic companies will seek to add patent-protected drugs to their product lines; consolidation, particularly for medical devices and Pharma; globalization, as a stronger U.S. dollar led to a fortified market presence; asset swaps, driven by the need to attend to core competencies, conserve cash and optimize the acquisition of high-asset prices.