The fourth quarter of 2018 saw a continued M&A appetite for drugmakers as buyers snapped up more pharmaceutical companies than those operating in other healthcare sectors, an analysis of S&P Global Market Intelligence data shows.
The quarter's largest pharmaceutical deal was from Chinese drugmaker Yunnan Baiyao Group Co. Ltd., which agreed to acquire Yunnan Baiyao Shareholdings Co. Ltd., a provider of herbal raw materials, for about $5 billion. Shanghai RAAS Blood Products Co. Ltd. also valued Grifols Diagnostic Solutions Inc., the U.S.-based transfusional diagnostics and immunology services unit of Spain's Grifols SA, at about $5 billion.
Eclipsing both these deals were Veritas Capital Fund Management LLC and Elliott Management Corp.'s offer of about $5.72 billion for Watertown, Mass.-based healthcare software maker athenahealth Inc., representing the highest valued M&A deal last quarter.
Another high-profile transaction was GlaxoSmithKline PLC's agreement to acquire Zejula maker Tesaro Inc., located in Waltham, Mass., for $4.93 billion. It confirmed the British drugmaker's shift toward oncology and is the sole biotechnology deal among the period's 20 largest transactions.
Boston Scientific Corp. agreed to acquire London's BTG PLC, which is best known for its rattlesnake antivenom CroFab, for $3.95 billion in November. The Marlborough, Mass.-based medical device maker later entered into $4.75 billion of revolving credit and term loan agreements to fund the transaction.
Another deal to pass the $1 billion mark during the period was Novartis AG's $1.96 billion purchase of radio-pharmaceuticals group Endocyte Inc., completed Dec. 21, 2018. It is the Swiss pharmaceutical giant's third multibillion-dollar M&A deal to be completed in 2018. Novartis said Endocyte complements Advanced Accelerator Applications SA, a nuclear medicine provider it acquired for $3.9 billion in January 2018. Novartis also snapped up AveXis Inc. for $8.7 billion in May last year.
Colfax Corp.'s $3.15 billion purchase of Vista, Calif.-based orthopedic device maker DJO Global Inc. and Johnson & Johnson's $2.1 billion sale of its diabetes care business LifeScan Inc. to Beverly Hills, Calif.-based asset manager Platinum Equity LLC were the period's two largest transactions in the healthcare equipment market.
In the fourth quarter, Centerbridge Partners LP agreed to buy Boston-based home and community-based health services provider Civitas Solutions Inc. for $1.36 billion.
Illumina Inc.'s $1.17 billion deal for Pacific Biosciences of California Inc. and Navis Capital Partners Ltd.'s $505.1 million deal for Device Technologies Australia Pty Ltd. were the top transactions in the quarter in the life sciences and healthcare distribution markets, respectively.
The period saw more megadeals in the global pharma sector compared to the previous quarter, consistent with a Moody's forecast that such transactions would pick up due to cost-savings, attractive pipeline assets and companies divesting their noncore business assets. The ratings agency also noted the new U.S. tax bill as a key factor.
Strong M&A activity by Chinese companies also marked the fourth quarter of 2018, exemplified by the Yunnan Baiyao and Shanghai RAAS Blood Products' respective $5 billion transactions.
Japanese drugmaker Takeda Pharmaceutical Co. Ltd. conducted 2018's largest megadeal, with its $79.01 billion purchase of Dublin-based biotechnology company Shire PLC, followed by Cigna Corp.'s acquisition of St. Louis-based pharmacy benefit manager Express Scripts Holding Co. for $68.66 billion.
Also notable throughout 2018 was Canada-based Aurora Cannabis Inc.'s aggressive acquisition strategy, carried out to boost its international footprint.
Looking ahead to 2019, the first week of the new year has brought a $74 billion merger between cancer drugmakers Bristol-Myers Squibb Co. and Celgene Corp., plus Eli Lilly and Co.'s announcement that it will buy Loxo Oncology Inc. for $8 billion.