Wednesday, December 22, 2010

And the 2010 M&A DOTY Nominees Are ...

OK, IN VIVO blog readers, it's time to have your say. We've supplied the nominations but YOU will decide the winners. Once again we've created a special page so you can vote on all three categories in one place. Remember you much click on the "VOTE" button in each individual category--Alliance, M&A, and Exit/Financing--to record your choices.


Below, in no particular order, are the nominees for IVB's 2010 M&A Deal of the Year!

ENDO/HEALTHTRONIC: This acquisition, which was the first of a 2010 Endo buying spree that eventually led to an uptick in the company's share price, illustrates how pharma needs to change given physician access grows tougher and differentiation may come by offering a continuum of products. The $258 million deal moved Endo from pain to pelvic health, adding about $185 million in annual revenues, and a new asset in a deal that is immediately accretive. Most importantly, it allows Endo to combine drugs, devices, and services in an area far less competitive than pain, providing the company new skill sets as health care reform and concerns about cost of treatment increasingly factor into strategic decision making. Read our full nomination post here.

PFIZER/KING: Pfizer's October acquisition of pain play King Pharmaceuticals for $3.3 billion takes advantage of the near-unique size and scale that will allow it to play virtually anywhere it likes in the pharmaceutical space. It illustrates one possible future for Pfizer's business development strategy (the era of the bolt-on deal) while at the same time highlighting abuse-resistant opioids, a class of drugs at the center of commercial and regulatory brouhaha. Of course Pfizer also gets King's auto-injectors and animal health businesses, further helping it diversify. But in addition to the resources necessary to drive forward those abuse-resistant opioids like Remoxy, it's King's specialty marketing sales force that can now go off and market some of Pfizer's pain franchise and the added heft Pfizer's primary care reps can give to some of King's portfolio that really drives this deal. Read our full nomination post here.

TEVA/RATIOPHARM: Germany's number-two generics firm had been up for sale since January 2009, following Adolf Merckle's suicide. There were believed to be three suitors, Pfizer, Actavis and Teva. Given Teva's ambitious growth plans and its very weak position in Germany, the largest European market, it's easy to see why the Israeli group did stump up $4.9 billion for the booty, including $820 million in debt--exceeding analysts' expectations, and apparently also exceeding what even Pfizer was willing to pay. Teva needed to solidify its position in the European generics sector, where it promised sales would increase to $9 billion from just over $5 billion in 2009. Read our full nomination post here.

ABBOTT/PIRAMAL: Abbott's whopping $3.72 billlion ($2.1 billion in cash) May 2010 deal to buy the branded generics business of Piramal Healthcare boasts a valuation that is an unheard of: nine-times sales and 31 times earnings. The deal, which put India's fourth largest pharma company under Abbott's wing, has kept global biopharma tongues wagging for months about over-heated valuations in emerging markets, and in particular, of course, India, as well as Big Pharma's true long-term intentions in Asia versus their short-term opportunistic motivations. It catapulted Abbott, which until last year could be diagnosed as emerging-markets deficient, into the number one spot in India. That's a steep climb from 2009, when it barely cracked the high teens, and puts it ahead of MNC India virtuosos like GSK and Sanofi. Abbott's move changed not only Abbott, however, but the entire Indian pharmaceutical landscape forever. Read our full nomination post here.

CELGENE/ABRAXIS: Celgene hasn't been shy about striking creative deals. The $2.9 billion cash and stock acquisition of Abraxis Bioscience fits that mold. After building its bona fides in liquid tumors with Thalomid (thalidomide) and the now-blockbuster Revlimid (lenalidomide), the New Jersey firm is spending nearly $3 billion to expand into solid tumors, an aggressive move at a time when retrenchment (Biogen Idec), reorganization (Genentech, via its parent Roche), desperate defense (Genzyme) and urgent reinvention (Amgen) are the main trends for big biotechs. In late 2007, Celgene's dealmakers high-stepped into the spotlight after years of relative silence, and they haven't relinquished the stage. The Abraxis deal, dollar-wise, is Celgene's largest yet, gaining it the breast cancer drug Abraxane. It's a modest seller so far -- $360 million in 2009 revenue -- but Celgene sees promise in other solid tumor indications, including a potential submission for use in non-small cell lung cancer in the first half of 2011, and that and other Abraxane progress is linked to significant CVRs. Read our full nomination post here.

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