Valeant Acquires Salix in the Latest Wave of Pharmaceutical M&A

Yesterday, Salix Pharmaecuticals accepted Valeant’s raised takeover offer of $10.96 billion in cash, ending the bidding war between Endo and Valeant for the gastrointestinal drug maker. Valeant’s new offer of $173 per share is about a 10% increase over its original offer of $158 per share. Valeant also paid $296 million for assets of bankrupt Dendreon, the maker of Provenge, an immunotherapy treatment for prostate cancer earlier this year.

Valeant’s acquisition of Salix is the latest in a wave of pharmaceutical acquisitions. Pharmaceutical M&A has nearly doubled in the first quarter of 2015 when compared to the same period in 2014. According to Reuters data, nearly $70 billion of deals in biotechnology and pharma have been announced this year. This trend will likely continue as big drug companies compete to build their pipelines.

Below I’ve outlined some interesting pharmaceutical deals from 2015:

Pfizer to buy Hospira $16 billion.

The acquisition will allow Pfizer to be a leading player in “biosimilar” drugs. “Biosimilar” drugs are lower-cost biotech drugs that compete with traditional biotech pharmaceuticals much like generic drugs. Biotech drugs are traditionally hard to copy, but biosimilar drugs are lowering the barrier. With the FDA approval of the first biosimilar drug, the market could expand to $20 billion by 2020.

Shire buys Meritage Pharma for at least $70 million.

Shire could pay an additional $175 million if certain milestones are met in this transaction. “Shire’s pipeline and strategic focus on rare diseases is further strengthened with the acquisition of Meritage, which also complements our strong GI capabilities,” said Shire’s Head of Research and Development, Philip J. Vickers.  Earlier this year, Shire also acquired NPS Pharmaceuticals to boost its rare disease drug pipeline.

Boston Scientific to buy Endo’s men’s health unit for $1.65 billion.

This is the first major acquisition for Boston Scientific since 2006, when it acquired Guidant Corp for $27 billion. Endo is shedding its’ men’s health business unit in order to refocus on its core pharmaceutical business. Boston Scientific will add the acquisition to its urology and women’s health department, creating a business worth $1 billion in sales.

Johnson and Johnson to Sell Cordis Unit for $2 billion to Cardinal Health.

Johnson and Johnson has been “strategically pruning” its portfolio to refocus on its core products and strategy. Last year, Johnson and Johnson sold its Ortho-Clinical Diagnostic unit to the Carlyle Group for $4 billion.

Using divestiture is a common way to refocus on core business units that are lucrative and in light with the company’s overall strategy. “This initiative is part of our ongoing disciplined portfolio management approach to focus on our most promising opportunities to help patients and drive growth,” said Gary Pruden, chairman of J.&J.’s global surgery group.

Abbvie to acquire cancer drug maker Pharmacyclics for $21 billion.

Pharmacyclics is the maker of Imbruvica, a blood cancer drug expected to reach $5.8 billion in sales by 2020. The acquisition will bolster Abbvie’s oncology unity and diversify its portfolio. Expanding the pipeline is essential to Abbvie’s success because the patent for its best-selling arthritis drug, Humira, expires in 2016. Once the patent expires, Humira sales will likely decrease as cheaper generic alternatives become available.

With all the deals announced, it’s probably safe to say that the pharmaceutical industry will remain active throughout 2015.

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