HBM M&A Survey - PharmaBlender | Pharma Industry Data … · January 2016 1 HBM Pharma/Biotech M&A...
Transcript of HBM M&A Survey - PharmaBlender | Pharma Industry Data … · January 2016 1 HBM Pharma/Biotech M&A...
January 2016
1
HBM Pharma/Biotech M&A Report 2016 Biopharma M&A in 2015 including in-depth analysis of trade sales of US and European biopharma companies backed by venture and private-equity investors
Key Findings
Record worldwide biopharma M&A volume in 2015 of $430 billion (including
contingent payments, asset deals and announced deals, such as the $160 billion merger
of Allergan/Pfizer).
Record deal value of $216 billion in 2015 from completed US and European transactions
(company trade sales and asset deals). $196 billion deal volume from completed US
transactions (up from $90 billion in 2014), lower transaction volume in Europe of
$20 billion (down from $50 billion in 2014).
Largest completed transactions in 2015 (target/buyer):
$70.5 billion Allergan (US)/Actavis (renamed to Allergan), $21 billion Pharmacyclics
(US)/Abbvie, $17 billion Hospira (US)/Pfizer, $10.9 billion Salix (US)/Valeant.
Largest announced (not completed) deals: $160 billion takeover of Allergan by Pfizer,
$40.5 billion sale of Allergan’s generics business to Teva and the acquisition of Dyax
(US) for $5.9 billion by Shire (UK).
Modest $6 billion M&A volume in Asia and rest-of-the-world (down from $12 billion in
2014). Largest deal: Acquisition of Mexican generics firm Rimsa by Teva for $2.3 billion.
21 US and European biopharma companies sold for at least $1 billion (up from 14 in
2014).
Trade sales of PE- and VC-backed US and European biopharma firms generated record
transaction volume with strong returns to investors.
About the HBM Pharma/Biotech M&A Report
The HBM Pharma/Biotech M&A Report covers all completed trade sales of US and European biotechnology and pharma companies with a therapeutic focus (Rx incl. generics as well as OTC). For 2014 and 2015, additional data for asset deals, announced deals and transactions outside of US and Europe is provided.
The report does not cover nutritional supplements, diagnostics, medical technology, digital health, life sciences tools, CROs, pharma manufacturing and services. Reverse mergers or minority investments are not included. Acquisitions that were structured as mergers for tax or other reasons are included.
Upfront transaction value is defined in this report as the upfront consideration in cash and/or shares. By contrast, the total transaction value also includes contingent (“biodollar”) payments linked to reaching certain milestones.
Additional data such as invested capital, exit multiples, stage of lead product etc were collected from various sources. Please note that such data may be based on estimates and may not have been available for all transactions. Also, the results presented in this report may deviate from our earlier reports due to subsequent reclassification or correction of data.
Further information about the HBM Pharma/Biotech M&A Report including a list of all transactions can be found under www.hbmpartners.com/report. The use of data and charts is permitted with reference to “HBM Partners Pharma/Biotech M&A Report”.
The authors of the report welcome any feedback or corrections:
Dr. Ulrich Geilinger, [email protected] , Dr. Chandra Leo, [email protected] and
Dr Emil Bujak, [email protected]
HBM Pharma/Biotech M&A Report 2016
2
Worldwide Biopharma M&A Transaction Volume 2014 and 2015
Chart 1: Worldwide Biopharma M&A Transaction Volume* 2014 & 2015
3Source: HBM Pharma/Biotech M&A Report
Worldwide Biopharma M&A Transaction Volume* 2014 & 2015
50.320.4
90.1195.9
11.9
5.878.8
207.8
231.1
429.8
0
50
100
150
200
250
300
350
400
2014 2015
Total Transaction Volume ($ billion)
Announced transactions
Canada, Asia, ROW
US
Europe
Worldwide
deal volume
(including
announced
transactions)
* Total transaction volume
(including contingent payments,
including asset deals and
announced transactions)
Completed and announced transactions, including asset deals
Completed and announced transactions, including asset deals, transaction volume including contingent payments.
Record worldwide biopharma M&A volume in 2015 of $430 billion (including contingent
payments, assets deals and announced deals, such as the $160 billion merger of
Allergan/Pfizer).
Record deal value of $216 billion1 in 2015 from completed US and European transactions
(company trade sales and asset deals). $196 billion deal volume from completed US transactions
(up from $90 billion in 2014), lower transaction volume in Europe of $20 billion (down from
$50 billion in 2014).
Largest completed transactions in 2015: $70.5 billion acquisition of Allergan (US) by Actavis
(renamed to Allergan)2, $21 billion takeover of Pharmacyclics (US) by Abbvie, $17 billion
purchase of Hospira (US) by Pfizer and $10.9 billion acquisition of Salix (US) by Valeant.
Largest announced - but not completed yet – deals in 2015: $160 billion takeover of Allergan
(Ireland) by Pfizer, $40.5 billion sale of Allergan’s generics business to Teva and the acquisitions
of Dyax (US) for $5.9 billion by Shire (UK).
Modest transaction volume in Asia and rest-of-the-world. Largest deal: Acquisition of Mexican
generics company Rimsa for $2.3 billion by Teva.
See next page for list of largest biopharma M&A transactions in 2015.
1 Inlcuding $70.5 billion acquisition of Allergan by Actavis (announced in 2014, completed in 2015)
2 Announced in 2014, completed in 2015
HBM Pharma/Biotech M&A Report 2016
3
Table 1: Largest Completed and Announced Biopharma M&A Transactions in 2015
Notes:
* Announced transactions, not completed yet at year end 2015
“Asset/Div.” includes sale of assets, products, divisions and subsidiaries
“Market” = Approved or marketed drug
Transactions ranked by upfront value
Target CompanyPublic/
Private
VC/PE-
Backed
Premium
Buyer
Upfront
Deal Value
($m)
Overall
Deal Value
($m)
Phase/Stage
of Lead
Product
Europe * Allergan / Ireland Public 27% Pfizer / US 160'000 160'000 Market
North Am. Allergan / US Public 10% Actavis (new Allergan) / Ireland 70'500 70'500 Market
Europe * Allergan Generics Business / Ireland Asset/Div. Teva / Israel 40'500 40'500 Market
North Am. Pharmacyclics / US Public 13% AbbVie / US 21'000 21'000 Market
North Am. Hospira / US Public 39% Pfizer / US 17'000 17'000 Market
North Am. Salix / US Public 15% Valeant / Canada 10'900 10'900 Market
North Am. Synageva / US Public 140% Alexion / US 8'400 8'400 3
North Am. Cubist / US Public 35% Merck & Co. / US 8'400 8'400 Market
North Am. Par Pharmaceutical / US Private PE Endo / Ireland 8'050 8'050 Market
North Am. Receptos / US Public 12% Celgene / US 7'200 7'200 3
North Am. * Dyax / US Public 35% Shire / Ireland 5'900 5'900 Market
North Am. NPS Pharmaceuticals / US Public 51% Shire / Ireland 5'200 5'200 Market
Europe AMCo (Amdipharm Mercury) / Ireland Private PE Concordia Healthcare / Canada 3'540 3'540 Market
North Am. Auspex Pharmaceuticals / US Public 42% Teva / Israel 3'500 3'500 3
North Am. Avanir / US Public 13% Otsuka / Japan 3'500 3'500 2
North Am. ZS Pharma / US Public 42% AstraZeneca / UK 2'700 2'700 NDA
North Am. Roxane (Boehringer I. Generics) / US Asset/Div. Hikma Pharmaceuticals / UK 2'650 2'775 Market
North Am. Auxilium / US Public 55% Endo / Ireland 2'600 2'600 Market
Europe Acerta Pharma / Netherlands Private VC AstraZeneca / UK 2'500 7'500 3
North Am. Ikaria / US Private PE Mallinckrodt / UK 2'300 2'300 Market
ROW Rimsa / Mexico Private Teva / Israel 2'300 2'300 Market
North Am. Kythera Biopharmaceuticals / US Public 24% Allergan / Ireland 2'100 2'100 Market
North Am. Therakos / US Private PE Mallinckrodt / UK 1'325 1'325 Market
North Am. Kremers Urban (UCB) / US Asset/Div. Lannett / US 1'230 1'230 Market
Europe Covis Pharma (assets) / Switzerland Asset/Div. PE Concordia Healthcare / Canada 1'200 1'200 Market
North Am. The Harvard Drug Group / US Private PE Cardinal Health / US 1'115 1'115 Market
North Am. Hyperion Therapeutics / US Public 8% Horizon / Ireland 1'100 1'100 Market
North Am. Janssen Nucynta / US Asset/Div. Depomed / US 1'050 1'050 Market
North Am. Sprout Pharmaceuticals / US Private VC Valeant / Canada 1'000 1'000 NDA
Europe Sigma-Tau Oncaspar Business / Italy Asset/Div. Baxter / US 900 900 Market
North Am. Gavis / US Private Lupin / India 880 880 Market
ROW Amoun Pharmaceutical/Mercury Holding / EgyptPrivate PE Valeant / Canada 800 800 Market
North Am. Flexus Biosciences / US Private VC Bristol-Myers Squibb / US 800 1'250 Preclinical
Asia Famy Care Women's Health Bus. / India Asset/Div. Mylan / US 750 800 Market
North Am. Cord Blood Registry / US Private PE AMAG / US 700 700 n.a.
North Am. Actavis Respiratory Business US/Can. / US Asset/Div. AstraZeneca / UK 700 700 Market
Asia Astellas Dermatology Business / Japan Asset/Div. LEO Pharma / Denmark 675 675 Market
North Am. Naurex / US Private Allergan / Ireland 560 560 3
North Am. Invagen/Exelan / US Private Cipla / India 550 550 Market
North Am. Crealta / US Private PE Horizon Pharma / US 510 510 Market
HBM Pharma/Biotech M&A Report 2016
4
Trade Sales of US and European Biopharma Company (completed deals)
Please note that the M&A transaction data presented in the next pages only relate to trade sales of (entire)
US and European biopharma companies with a therapeutic focus. “Asset deals”, the sale of divisions or
subsidiaries, M&A transactions outside of the US and Europe, and transactions announced, but not completed
in 2015, are not included.
Chart 2: US and European Biopharma Company Trade Sales (Upfront Deal Values)
4Source: HBM Pharma/Biotech M&A Report
US & European Biopharma Company Trade Sales*
52.7
2.1 3.5 7.7 7.620.6 10.4
21.3 13.4 8.9
28.7
31.947.5
169.0
59.641.7
32.627.1
68.4
184.481.3
34.1
51.0
176.7
67.2 62.3
43.0 48.4
81.8
193.3
72 7167
63
74
6470 70 70
97
0
50
100
150
200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Upfront Transaction Volume ($ billion)
Number of company
trade sales US & Europe
Completed
European
company
trade sales
Completed
US company
trade sales
Trade sales of public & private US & European biopharma companies (completed transactions)
* Sale of companies
(not Including asset deals)
Completed trade sales of public and private US and European biopharma companies, not including asset deals or purchase of divisions
Close to 100 US and European biopharma companies were sold during 2015 with $193.3 billion
upfront transaction value ($205.8 billion total transaction volume including “biodollars”).
Surging transaction volume from US trade sales (largest US transactions see page 2).
Declining transaction volume from European trade sales with only two major completed
transactions in 2015: $3.5 billion sale of PE-backed AMCo (UK) to Concordia Healthcare
(Canada), purchase of 55% stake in VC-backed Acerta (Netherlands) by AstraZeneca (UK) for an
initial $2.5 billion with potential total deal value of $7 billion.
A record number (21) of biopharma companies was sold for $1 billion upfront or more (see next
page).
HBM Pharma/Biotech M&A Report 2016
5
US & European Biopharma Trade Sales With At Least $1 Billion Upfront
Chart 3: US and European Biopharma Companies Sold for at Least $1 Billion Upfront
6Source: HBM Pharma/Biotech M&A Report
8
3 4
9
5 57
1
57
5
2
4
2
2 2
2
3
7
913
5
8
11
7 7
10
4
14
21
0
5
10
15
20
25
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
# of buyers/transactions
Other buyers
Large pharma /biotech firms
# of transactions
>=$1 billion upfront
Number of buyers
with at least one
$1 billion
transaction
Biopharma Company Trade Sales With Upfront >=$1 Billion
Trade sales of public & private US & European biopharma companies (completed transactions)
Buyers with 2
>=$1bn deals:
Allergan (Actavis)
AstraZeneca
Endo
Mallinckrodt
Valeant
Completed trade sales of public and private US and European biopharma companies, not including asset deals or purchase of divisions
21 biopharma companies sold for at least $1 billion upfront consideration (2 private European
and 5 private US companies, 14 US public companies).
Number of buyers that play in “$1 billion plus deals” is increasing with companies outside of
large pharma/biotech (i.e. the 20 largest biopharma companies) becoming more active in the
large deal segment.
As the chart below shows, the US has clearly pulled ahead of Europe in the number of large(r)
transactions.
Chart 4: US and European Biopharma Trade Sales and Upfront Transaction Size
7Source: HBM Pharma/Biotech M&A Report
15 13
2519 17
25
13
8
1119
18
142
4
22 10
19
0
10
20
30
40
50
60
2013 2014 2015 2013 2014 2015
# o
f Tr
ansa
ctio
ns
>=$1bn
$100m-$999m
<$100m
US & European Biopharma Trade Sales by Upfront Transaction Size
Only for transactions where respective
information was available.
Trade sales of private VC-backed US & European biopharma companies
European Targets
US Targets
Completed trade sales of public and private US and European biopharma companies, not including asset deals or purchase of divisions
HBM Pharma/Biotech M&A Report 2016
6
Premiums Paid for Public US and European Biopharma Companies
Comment: Premium = increase of stock price on the day of deal announcement. Only deals with an upfront
consideration of at least $100 million are included in this analysis. Given the high degree of variation in
premiums paid, the average numbers should be interpreted with caution.
Chart 5: Premiums Paid for US and European Public Biopharma Companies
7Source: HBM Pharma/Biotech M&A Report HBM Partners
46%49%
62%
53%
47%
86%
59%
37%
60%
36%
49%
61%
50%
43%
69%
53%
33%
55%57% 57%
40%
33%
42%
25%28%
31%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Ave
rag
eP
rem
ium
Pai
dfo
rP
ub
lic T
akeo
vers
US deals
US & European deals
European deals
Average Premiums Paid for Public BioPharma Companies
US and European public
takeovers with upfront
consideration of at least
$100 million
Trade sales of public US & European biopharma companies
Trade sales of public US and European biopharma companies with an upfront consideration of at least $100 million.
No significant acquisition of a publicly listed European company in 2015.
Premiums paid in 2015 lower than in most previous years (public valuations in 2015 were
already at a record high, so buyers were not willing to pay very high premiums on top).
Premiums paid in the US are generally higher than in Europe.
No significant correlation between premium paid and transaction size.
Clinical-stage companies generally received higher premiums than companies with approved or
marketed products.
No significant differences in premiums paid across various therapeutic areas with the exception
of anti-infectives (high premiums paid for some anti-viral companies).
HBM Pharma/Biotech M&A Report 2016
7
Trade Sales of Private US & European Biopharma Companies
Chart 6: Trade Sales of Private US & European Biopharma Companies
8Source: HBM Pharma/Biotech M&A Report HBM Partners
Trade Sales of Private Biopharma Companies
3.1 4.42.4 1.8 2.3
4.0 2.8 3.45.1
6.8
2.4
1.7
14.6
10.410.3
10.5
17.9
1.97.4
6.8
2.1
0.9 1.5
5.0
3.3
4.2
8.7
2.7
9.810.8
20.7
14.015.2
20.5
28.0
52
59
37 38
54
42
58
52 54
78
0
5
10
15
20
25
30
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Up
fro
nt
Tra
nsa
ctio
n V
alu
e ($
bill
ion
)
VC-backed co's PE-backed co's Other private co's
Number or private
companies sold
Trade sales of private US & European biopharma companies (completed transactions)
Completed trade sales of private US and European biopharma companies, not including asset deals or purchases of divisions. “Other
private companies” are companies not majority-owned by venture or private equity investors.
$28 billion upfront deal value ($40.6 billion total deal value) from 78 private transactions.
Record upfront transaction volume of $6.8 billion ($18.7 billion total deal value) for VC-backed
company trade sales (see pages 11ff).
PE-backed pharma company exits have generated over $10 billion of annual transaction volume
every year since 2011. Record transaction volume of $17.9 billion in 2015.
A list of the larger private US & European biopharma company trade sales in 2015 can be found on
the next page.
HBM Pharma/Biotech M&A Report 2016
8
Table 2: Largest Private US and European Private Biopharma Trade Sales 2015
Notes:
Not including announced transactions, not including asset deals
“Market” = Approved or marketed drug, “n.a.” = not available or not applicable
Transactions ranked by upfront value
Target CompanyPublic/
Private
VC/PE-
Backed
Premium
Buyer
Upfront
Deal Value
($m)
Overall
Deal Value
($m)
Phase/Stage
of Lead
Product
VC Invest-
ment ($m)
US Par Pharmaceutical / US Private PE Endo / Ireland 8'050 8'050 Market
Europe AMCo (Amdipharm Mercury) / Ireland Private PE Concordia Healthcare / Canada 3'540 3'540 Market
Europe Acerta Pharma / Netherlands Private VC AstraZeneca / UK 2'500 7'500 3 550
US Ikaria / US Private PE Mallinckrodt / UK 2'300 2'300 Market
US Therakos / US Private PE Mallinckrodt / UK 1'325 1'325 Market
US The Harvard Drug Group / US Private PE Cardinal Health / US 1'115 1'115 Market
US Sprout Pharmaceuticals / US Private VC Valeant / Canada 1'000 1'000 Market 80
US Gavis / US Private Lupin / India 880 880 Market
US Flexus Biosciences / US Private VC Bristol-Myers Squibb / US 800 1'250 Preclinical 38
US Cord Blood Registry / US Private PE AMAG / US 700 700 n.a.
US Invagen/Exelan / US Private Cipla / India 550 550 Market
US Crealta / US Private PE Horizon Pharma / US 510 510 Market
Europe Auden McKenzie / UK Private Actavis / Ireland 477 477 Market
US OnCore / US Private Arbutus (ex Tekmira) / Canada 380 380 Preclinical
Europe Idis / UK Private PE Clinigen / UK 340 340 Market
US Cardioxyl / US Private VC Bristol-Myers Squibb / US 300 2'075 2 67
Europe Dezima / Netherlands Private VC Amgen / US 300 1'550 2 20
US Foresight Biotherapeutics / US Private Shire / Ireland 300 300 2
US Scioderm / US Private VC Amicus Therapeutics / US 229 847 NDA 36
Europe SuppreMol / Germany Private VC Baxter / US 225 225 2 51
Europe Convergence Pharmaceuticals / UK Private Biogen / US 200 675 Market
Europe GlycoVaxyn / Switzerland Private VC GlaxoSmithKline / UK 190 190 1 42
Europe Heptares / UK Private VC Sosei / Japan 180 400 Market 68
Europe Trophos / France Private VC Roche / Switzerland 139 555 2 50
Europe Prosonix / UK Private VC Circassia / UK 110 158 NDA 39
US Adheron / US Private VC Roche / Switzerland 105 580 1 9
US PaxVax / US Private VC Cerberus Capital / US 105 105 Market 100
US Quanticel / US Private VC Celgene / US 100 485 Preclinical
Europe EirGen / Ireland Private Opko Health / US 100 134 Market
Europe GES Group / Spain Private Altan Pharma / Ireland 99 99 Market
Europe cCam Biotherapeutics / Israel Private VC Merck & Co. / US 95 605 Preclinical 8
US OMT (Open Monoclonal Technology) / US Private VC Ligand / US 93 178 Preclinical 5
US Meritage Pharma / US Private VC Shire / UK 70 245 2 34
Europe EpiTherapeutics / Denmark Private VC Gilead Sciences / US 65 65 Preclinical 31
Europe Actogenix / Belgium Private VC Intrexon / US 60 60 3 52
Europe Stage Cell Therapeutics / Germany Private Juno / US 59 210 n.a.
Europe OctreoPharm / Germany Private Ipsen / France 56 56 2
US Precision Biologics / US Private VC Nantworks / US 50 50 2 15
US Innocutis / US Private VC Cipher / Canada 46 46 Market 7
US X-Body / US Private Juno / US 44 44 n.a.
US Silarx Pharma / US Private Lannett / US 42 42 Market
US Annovation Biopharma / US Private VC The Medicines Company / US 35 60 1 9
Europe Bionovion / Netherlands Private Aduro Biotech / US 32 64 Preclinical
US Innoteq / US Private Par Pharma / US 27 27 n.a.
US ViroXis & Santalis / US Private VC TFS Corporation / Australia 23 23 2 11
US Abeona / US Private PlasmaTech / US 23 33 Preclinical
Europe Lanthio Pharma / Netherlands Private VC Morphosys / Germany 23 23 Preclinical 6
Europe T-cell Factory / Netherlands Private Kite Pharma / US 21 21 Preclinical
HBM Pharma/Biotech M&A Report 2016
9
Trade Sales of PE-Backed US and European Biopharma Companies
Chart 7: Trade Sales of Private PE-Backed US & European Biopharma Companies
9Source: HBM Pharma/Biotech M&A Report HBM Partners
2.40.0
1.7
14.6
10.4 10.3 10.5
17.9
1
2
0
2
3 3
9
4
9
8
0
5
10
15
20
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Up
fro
nt
Tran
sact
ion
Val
ue
($ b
illio
n)
incl. $5.6 bn
Actavis/
Watson
Trade Sales of Private PE-Backed Biopharma Companies
incl. $13.7 bn
Nycomed/
Takeda
incl. $8.7 bn
Bausch&L./
Valeant
Number of PE-backed
private companies sold
incl. $4.5 bn
Omega/
Perrigo
Trade sales of private US & European biopharma companies (completed transactions)
incl. $8.05 bn
Par Pharm./
Endo
Completed trade sales of PE-backed private US and European biopharma companies
As in previous years, buyout funds took advantage of the good exit environment selling 8 PE-
backed pharma companies with a record total deal value of $17.9 billion. 6 private-equity-
backed companies were sold for over $1 billion each, with the sale of Par Pharmaceuticals (US)
to Endo (Ireland) for $8.05 billion as the largest transaction.
While investor returns from these deals were not as spectacular as in some trade sales of VC-
backed biopharma companies, multiples were generally strong with some high absolute gains.
It is rumored that TPG made a $5 billion gain on its investment in Par Pharmaceuticals.
More details on PE-backed biopharma company trade sales in 2015 can be found on the next page.
Private-Equity Funds Investing in the Pharma Sector
During the last 10 years (2006-2015) buyout and private-equity funds have purchased 24 biopharma companies (mainly in specialty pharma, generics and OTC fields) for a total transaction volume of around $6 billion. Most such transactions were done in the recovery period after the financial crisis (2011-2013). As valuations in the sector increased, financial buyers were less active and in 2015 only one significant buyout was recorded: the purchase of a majority in PaxVax (US) by Cerberus for $105 million. Additionally, a few acquisitions have been completed by PE-backed pharma firms such as the purchase of US Vista Pharm by Vertice (value not disclosed), an acquisition vehicle financed by Warburg Pincus.
Based on the strong returns from the sale of PE-backed pharma companies, we expect the appetite of buyout funds for the sector to increase, especially if valuations come back to lower levels.
HBM Pharma/Biotech M&A Report 2016
10
Trade Sales of Private Equity-Backed Pharma Companies During 2015 (ranked by transaction value, headline: Target Company / Buyer / Transaction Value / Business)
Par Pharmaceuticals (US) / Endo (Ireland) / $8.05 billion / Specialty generics In May 2015, Endo International announced the takeover of Par Pharmaceutical for $8.05 billion which includes certain debt. TPG Capital took Par private in a $1.84 billion transaction in 2012. It was reported that TPG Capital will score a $5 billion profit, or about 6.5 times its investment, from its sale of Par Pharmaceutical, holding the company for less than three years.
AMCo (US) / Concordia Healthcare (Canada) /$3.54 billion / Generics In October 2015, AMCo was sold to Concordia Healthcare, in a deal that values the maker of generic drugs at £2.3 billion ($3.5 billion) including debt. Generics producer Amdipharm was acquired in October 2012 by UK buyout house Cinven for £367 million ($590 million). The private company, founded in 2002, had revenues of over £110 million. Cinven reported that Amdipharm was combined with Mercury Pharma, acquired in September 2012. Thereafter Amdipharm Mercury (AMCo) acquired Abcur in 2013, Focus Pharma in 2014 and Primegen in 2015. Investment returns for Cinven were not disclosed. Considering the original purchase price for Amdipharm, a multiple of over 3x can be estimated.
Ikaria (US) / Malinckrodt (UK) / $2.3 billion / Neonatal intensive care In Q2 15, Mallinckrodt, a leading global specialty biopharmaceutical company, purchased Ikaria in a transaction valued at approximately $2.3 billion. In early 2014, Madison Dearborn Partners bought hospital therapy provider Ikaria Inc. in a transaction that valued the company at $1.6 billion. Existing venture investors in Ikaria reinvested some of the proceeds into a 45 percent stake in the company. The sale is expected to produce a 140% IRR for Madison Dearborn or a multiple of over 2x. Not a bad outcome, considering that the investment was held not much longer than one year.
Therakos (US) / Malinckrodt (UK) / $1.325 billion / Palliative treatment In August 2015, Mallinckrodt, the global specialty pharma company, purchased Therakos for $1.325 billion. In October 2012, the Gores Group acquired Therakos from Ortho Clinical Diagnostics, a Johnson & Johnson Company. Deal terms were not disclosed. Therakos offers extracorporeal photopheresis immune modulation therapy for the palliative treatment of certain skin cancers. The company has sales of close to $200 million. Investment returns for Gores are not known. However, the investment multiple is believed to be attractive.
The Harvard Drug Group (US) / Cardinal Health (US) / $1.1 billion / Drug distribution, generics In June 2015, Cardinal Health agreed to buy Harvard Drug Group for about $1.12 billion in a move aimed at boosting the drug wholesaler’s core generics business. Court Square acquired Harvard Drug, mainly active in drug distribution, in 2010 from H.I.G. Capital. No return multiples are available for the transaction.
Cord Blood Registry CBR (US) / AMAG Pharmaceuticals (US) / $700 million / Newborn stem cells In June 2015, GTCR announced that CBR will be acquired by AMAG Pharmaceuticals, Inc. a specialty pharmaceutical company that focuses on maternal health and hematology, for $700 million. Founded in 1992, Cord Blood registry (CBR) is the world’s largest newborn stem cell company. In September 2012, GTCR partnered with life sciences executive Geoffrey Crouse to acquire CBR. No investment returns for the deal are available.
Crealta (US) / Horizon Pharma (US) / $510 million / Specialty pharma, gout treatment In December 2015, Horizon Pharma acquired Crealta for $510 million in cash. Crealta was formed in 2013 by Ed Fiorentino and GTCR, a private equity fund, to acquire specialty pharma products. Still in 2013, the company acquired the assets of Savient (for $120 milllion) including its product Krystexxa to treat chronic refractory gout. It is estimated that Crealta had sales of over $50 million in 2015. Investment multiples for GTCR are not disclosed, but is estimated the multiple was around 3x to 5x.
IDIS (UK) / Clinigen (UK) / $340 million / Distribution of unlicensed medicines In April 2015, IDIS was sold to Clinigen Group plc, the AIM-listed specialty pharmaceuticals and pharmaceuticals services company, for an enterprise value of $338 million (£225 million). UK CBPE capital acquired IDIS in 2005 for approximately $35 million. IDIS is the global leader in providing regulatory and ethically compliant access to unlicensed medicines for healthcare professionals and their patients in over 100 countries. The sale to Clinigen represents a money multiple of 22x to CBPE on its approx. $15 million (£9.4 million) investment in IDIS.
HBM Pharma/Biotech M&A Report 2016
11
Trade Sales of Private VC-Backed US and European Biopharma Companies
Chart 8: Trade Sales of Private VC-Backed US and European Biopharma Companies
11Source: HBM Pharma/Biotech M&A Report
Trade Sales of VC-Backed Private Biopharma Companies
3.14.4
2.4 1.8 2.34.0
2.8 3.45.1
6.8
3.55.2
3.6 4.7 4.7
6.7
7.4
6.88.4
18.7
28
31
25
18
2827
28
2325
35
0
5
10
15
20
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Tran
sact
ion
Val
ue
($ b
illio
n)
Upfront transaction value
Total transaction value
Number of VC-backed
companies sold
Trade sales of private VC-backed US & European biopharma companies
Chart 9: Upfront Transaction Volumes US vs. Europe
12Source: HBM Pharma/Biotech M&A Report HBM Partners
Trade Sales of VC-Backed Private Pharma/Biotech Companies
1.20.5 0.8 0.7 0.3 0.4 0.6
1.00.5
3.9
1.9
3.8
1.61.1
1.9
3.6
2.1 2.4
4.5
2.9
14 14 14
98
910
5
98
16
14
1716
10
19
17
23
14
17
0
1
2
3
4
5
6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Up
fro
nt
Tran
sact
ion
Val
ue
($ b
illio
n)
Upfront Transaction Value Europe US
Number of US
trade sales
Trade sales of private VC-backed US & European biopharma companies
Number of European
trade sales
Completed trade sales of private VC-backed US and European biopharma companies.
The 35 VC-backed companies sold in 2015 generated record upfront and total deal values.
The $2.5 billion purchase of 55% of Acerta (Netherlands) 1 by Astra Zeneca pushed European
deal values in 2015 above US numbers.
2014 and 2015 were the best “exit years” for VC-backed US and European biopharma companies
(see next pages).
1 Note: Acerta also had operations in the US. In addition to the upfrtont, AstraZenaca will make an unconditional payment
of $1.5 billion and has the right to acquire the remaining 45% for $3 billion. The deal is recorded in our database with $2.5 billion upfront and $7 billion total deal value.
HBM Pharma/Biotech M&A Report 2016
12
Average Values of VC-Backed US & European Biopharma Companies Sold
Chart 10: Average Investment Amounts & Transaction Values
13Source: HBM Pharma/Biotech M&A Report
161
191171
313
203
317 320
376
420
667
139
161
113 119 103
192
126
190
267 251
51 6643 58 48
66 56 53 47 45
0
100
200
300
400
500
600
700
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Ave
rag
e V
alu
es (
$ m
illio
n)
Average Total Transaction Value
Average Upfront Transaction Value
Average Invested Capital
Average Investment / Average Upfront and Total Deal Values
Only for transactions where respective
information was available.
Trade sales of private VC-backed US & European biopharma companies
Trade sales of private VC-backed US and European biopharma companies
High average upfront and record average total deal values in 2015 from VC-backed company
exits. Average upfront payments in 2014 and 2015 over $250 million. Average total deal value
in 2015 over $600 million!
Median deal values are substantially lower (especially in years such as 2015 with many smaller
transactions and a few large deals):
2013 2014 2015
Median upfront deal values ($ million): 155 133 100
Median total deal values ($ million): 314 221 190
Exceptional Deals in 2015
In 2015, quite a number of VC-backed biopharma companies were sold for high upfront and even higher total multiple. We would like to mention just three exceptional deals:
AstraZeneca purchased 55% of Acerta Pharma (with operations in the Netherlands and the US) for $2.5 billion upfront plus a further unconditional payment of $1.5 billion. AstraZeneca has the right to acquire the remaining 45% for $3 billion. Investors are reported to have invested $550 million in the company.
Investors in US Sprout Pharmaceuticals with an approved women’s sexual health drug also made an estimated 8x on their $1 billion sale to Valeant.
Only an estimated $20 million was invested in Dutch Dezima which was sold to Amgen for $300 million upfront plus over $1 billion contingent payments. Mitsubishi Tanabe from which Dezima licensed its cholesterol lowering drug, will also get a part of the deal proceeds.
HBM Pharma/Biotech M&A Report 2016
13
Contingent Payments in VC-Backed Biopharma Trade Sales
Comment: Acquisitions of VC-backed biopharma companies, especially pre-commercial ones, are often
structured as staged deals, whereby a significant portion (sometimes the majority) of payments are linked to
the achievement of certain milestones. Whereas in the years up to 2008, fewer deals were staged, contingent
payment structures are quite common.
Chart 11: Contingent „Biodollar“ Payments as % of Total Deal Value
14Source: HBM Pharma/Biotech M&A Report HBM Partners
Contingent „Biodollar“ Payments as % of Total Deal Value
5
10
64 3 3 3 3 4
2
1
1
1
1 4
1 2 3 2
1
6
43
5
8 5
8
11%
5%
14%
62%
33%31%
37%39% 39%
47%
0
5
10
15
20
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
# o
f Tr
ansa
ctio
ns
Over 50% contingent payments
Up to 50% contingent payments
No contingent payments
Only for transactions where respective
information was available.
Average
contingent
payments in %
total deal value
(not weighted by
deal size)
Trade sales of VC-Backed US
and European companies
with total upfront
consideration of at least
$100 million
Trade sales of private VC-backed US & European biopharma companies
Trade sales of VC-backed private US and European biopharma companies with >=$100 million upfront deal value.
In 2015 (as in 2012 and in 2013), in over half of trade sales contingent payments were higher
than the upfront payments.
In the period up to 2009, significant contingent payments were mostly seen in earlier clinical
stage deals and in deals where investor returns were low (i.e. investors had to accept such deal
structures). By contrast, additional earn-out payments are today sometimes demanded by
sellers of sought-after companies, providing additional upside on top of an already attractive
upfront multiple.
HBM Pharma/Biotech M&A Report 2016
14
VC-Backed Biopharma Trade Sales and Therapeutic Areas
Chart 12: Upfront Transaction Volume by Therapeutic Area
19Source: HBM Pharma/Biotech M&A Report
1.7 1.92.6 2.1
5.01.4 0.90.2
0.6
1.9
1.1
0.5 0.6
1.4
0.7
0.3
1.20.2
0.7
0.5 1.0
0.9
0.5
0.9 1.4
0.3
0.3
0.4
0.5
0.2
0.3
0.8
7.4
4.2
6.3 6.2
12.0
0
2
4
6
8
10
12
2006-07 2008-09 2010-11 2012-13 2014-15
Up
fro
nt
Tran
sact
ion
Vo
lum
e ($
bill
ion
)
Cardiovascular
Metabolic/Diabetes
Respiratory
Auto-immune/Inflammation
CNS/Pain
Anti-infectives
Oncology
Trade Sales of VC/PE-Backed Biopharma Companies by Therapeutic Area
Only for transactions where respective
information was available.
Trade sales of private VC-backed US & European biopharma companies
Total upfront
transaction volume
VC-backed biopharma
trade sales
(all indications)
Trade sales of private US and European VC-backed biopharma companies. Therapeutic area of lead product, more than one indication
possible. Only shown for major therapeutic categories.
The chart above shows that oncology was the most important therapeutic area in biopharma
M&A: Except in the years 2006/2007, trade sales of VC-backed oncology companies generated
30% to 40% of transaction volume or 37% over the ten year period.
Investors in oncology companies also fared well with increasing and recently superior investor
returns. While until 2011, multiples generated by oncology companies were modest (or
average), returns thereafter (2012-2015) were clearly above average with a multiple of upfront
consideration to invested capital of close to 10x1 (vs. a 5x for non-oncology transations).
The next most important therapeutic area in terms of 10-year upfront deal value were anti-
infectives with 17% and followed by CNS/pain with 10%, both with high transaction volumes
in 2015.
From our data we cannot see a significant under- or over-performance of exit returns of any
therapeutic area (except the recent outperformance in oncology as mentioned above).
1 I.e. 8x and 4x investor multiples on upfront, assuming investors owned about 80% of the sold companies.
HBM Pharma/Biotech M&A Report 2016
15
“Losers” vs. “Winners”
Chart 13: “Losers” vs. “Winners”
20Source: HBM Pharma/Biotech M&A Report HBM Partners
Average Multiples On Total Deal Value – US vs. Europe
Only for transactions where respective
information was available.
36%
29%
36%39%
36%
19%
7%9% 8%
0%
21%
26%
32%
22%
29%31%
29%
48%
44%
60%
0%
10%
20%
30%
40%
50%
60%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% of All VC-Backed Company Trade Sales
"Losers" (loss making deals)
"Winners" (at least 3x return to investors)
Trade sales of private VC-backed US & European biopharma companies
Trade sales of private VC-backed US and European biopharma companies. Only transaction were return estimates were available.
“Losers” = Transactions with upfront value below investment amount.
“Winners” = Transactions were investors made 3x or more (based in estimates in some cases)
Up to 2010, the number of “losers” was higher than the number of “winners”.
In 2015, no trade sale of a VC-backed biopharma company (with reported deal values) produced
a loss. Note: As deal values were not reported for all transactions, it may well be that there was
a “loser” in 2015.
60% of transactions in 2015 generated a 3x or more on invested capital.
Investor Returns and Stage of Lead Product
Multi-year return multiples for companies of all stages have on average been quite similar (with an upward trend for all stages after 2012). Pre-clinical and phase I companies sold in the ten years from 2006-2015 generated on average slightly higher multiples than later-stage companies (which generally generated higher absolute gains). In 2015, however, pre-clinical and phase I companies were sold at a (non-weighted) average multiple of around 11x* (upfront value divided by investment) vs. an average of 5x for the later-stage companies. Thus, early-stage companies with “hot” drugs or discovery platforms have generated great investor returns recently.
As there was a high variance in exit multiples (from company to company and from year to year), any such conclusion should be interpreted with caution.
* 14x for pre-clinical/phase I oncology companies and 9.6x for other pre-clinical/phase I companies
HBM Pharma/Biotech M&A Report 2016
16
Investor Returns US vs. Europe
Chart 14: Investor Returns US vs. Europe (Upfront Multiples)
17Source: HBM Pharma/Biotech M&A Report
Average Multiples On Upfront Deal Value – US vs. Europe
Only for transactions where respective
information was available.
2.4x
3.2x
2.1x2.0x
2.0x
3.2x2.7x
3.4x
6.6x7.0x
3.5x
1.0x
3.4x
1.9x
1.2x 1.2x1.5x
4.2x
2.6x
4.3x
0
1
2
3
4
5
6
7
8
9
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Rat
io /
Mu
ltip
le
Weighted-average upfront multiples US
Weighted-average upfront multiples Europe
Trade sales of private VC-backed US & European biopharma companies
Actual investor multiples
approx. 20%-25% lower!
Trade sales of private US and European VC-backed biopharma companies. Weighted-average total multiples calculated by dividing
sum of upfront deal value by sum of invested capital.
Upfront multiples in most years better in the US than in Europe.
Clear upward trend in the US since 2010 and in Europe since 2012.
While European returns have also improved recently, the data indicate a widening of the gap
between US and European returns.
Please address questions, comments or corrections to the authors of this report:
Dr Ulrich Geilinger, [email protected] / Dr Chandra P. Leo,
[email protected] / Dr Emil Bujak, [email protected]
About HBM Partners
HBM Partners is among the global leaders in healthcare-focused investing with approximately $1.5 billion under management. HBM focuses on development stage, growth and buy-out financings of private and public biopharma, medical device and diagnostics companies. Investments in private companies usually range between $10 million to $40 million.
HBM Partners advises HBM Healthcare Investments AG, HBM BioCapital and further specialized public-equity funds. HBM Partners has been an active contributor to value creation in its portfolio companies, generating over 50 trade sales and IPOs since inception.
HBM Partners AG, CH-6300 Zug, Switzerland, www.hbmpartners.com, phone +41 43 888 71 71