Everything You Need to Know About Biotech M&A in a Single Chart


You're looking at a chart of mergers-and-acquisition activity for the biotech sector going back to 2000. The chart was put together and published by BioCentury recently. ISI Group analyst Mark Schoenebaum shared the M&A chart with clients today, and I'm sharing it with you.

I don't have anything profound to say about the M&A activity trends, other than noting the number of public acquisitions and deal value increased in 2013 over 2012. Both years fell significantly below 2011 M&A deal flow.

There was some concern raised last year about significantly higher biotech valuations having a negative effect on M&A activity. Simply put: Acquirers might find takeout prices of their favored targets too high to justify. [Remember the rumors last year of Roche  (ROG) wanting to buy Alexion Pharma  (ALXN) but being turned off by the required price.]

Well, the M&A numbers from 2013 don't seem to suggest a significant slowdown in deal flow, so perhaps that bodes well for continued higher trend in 2014.

Here's what the analysts at J.P. Morgan had to say about biotech M&A in 2014:

Regarding M&A, we anticipate that the uptick in higher-profile activity (Onyx, ViroPharma, Algeta) in 2H13 could extend into 2014 as pharma companies continue to seek out bolt-on deals (facilitated by plush pharma balance sheets and more mature biotech pipelines). This type of tailwind may be necessary for biotech to once again significantly outperform the broader markets.

My personal takeout predictions for 2014 are Regeneron Pharma (REGN), Cempra (CEMP), NPS Pharma (NPSP), Clovis Oncology (CLVS) and Halozyme (HALO). Throw in Biomarin Pharma (BMRN), too. Will deals for these companies actually happen? I have no clue.

-- Reported by Adam Feuerstein in Boston.  

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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