The M&A Numbers

M&As have become as essential as R&D to pharma's future, and this year is no exception. According to life-science investment bank Young & Partners (Y&P), 19 major deals have been inked so far, worth a total of $22.7 billion, indicating that 2008 is on track to match 2007's in volume (44 M&As), though not its dollar value ($79.5 billion).

Dollar Value of Worldwide Pharma Acquisitions

Only six deals have hit blockbuster status—the biggest by far Takeda's $8.8 billion grab of Millennium. In fact, '08 is shaping up as the year the Japanese drug industry makes its move into the global market. Five of the top 10 deals were made by Japanese firms, shoring up shop at home or placing stakes in the US.

For the rest of '08, Y&P predicts a slight drop-off in M&As, given a teetering global economy and the unknowns about healthcare policies with the Presidential election looming. Expect the year's volume to come in under the five-year average of $66.5 billion.

Dollar Value of Worldwide Biotechnology Acquisition

If cash-rich drug giants are unbothered by the financial climate, the same cannot be said for high-risk, low-revenue biotechs. While debt financing ($223 million) is on a par with last year's total ($363 million), equity has tanked, down from $5.8 billion in '07 to $1.1 billion, with only one IPO this year.

But biotech M&A action remains hot, as Big Pharma prowls for new drugs to plug holes in pipelines. With 10 deals adding up to $3.1 billion so far, '08 looks likely to match '07 in volume (21) and beat it in value ($4.3 billion). Yet none has hit the billion-dollar mark. According to Y&P, many of the mature biotechs were picked off in '06, when there were 25 deals totalling $9.8 billion.

Top 10 Deals-First Half 2008

Of course, the entire M&A story could be rewritten by a speedy meeting of minds between Roche and Genentech. That deal would boost the year's final tally by as much as $55 billion. But at that price, an agreement is not likely to come easy. —Walter Armstrong