Although its hard to think about in the midst of the Great August Rollercoaster in the markets, the clear takeaway is that 1H2011 was actually pretty interesting for venture-backed biotech exits, with deals like Plexxikon-Daiichi, Advanced Biohealing-Shire, Biovex-Amgen, Calistoga-Gilead, and Prism-Baxter all with total deal values north of $200M. A nice chart showing the uptick in the # and $ of M&A deals over the past 2.5 years:
Here are their conclusions (boldface mine), quoted from their report:
- M&A activity in pharma/biotech further picked up during the first half of 2011. Both the number of deals and the transaction volume were high. Upfront transaction values from biopharma trade sales reached $51.6 billion (compared to $67 billion for the whole year of 2010).
- 18 companies were sold for an upfront consideration of at least $200 million (of which 8 were private companies). Such a high number of sizable transactions was reached previously only in H2 2006.
- Deal volume from VC/PE-backed company trade sales jumped to a record $17.2 billion. This high number was driven by the $13.7 billion acquisition of Swiss specialty pharma company Nycomed by Takeda. Even without this transaction, deal volume in this category reached $3.5 billion (and $5.2 billion if one includes contingent milestone payments).
- Exits in H1 2011 on average produced good returns to venture investors. The ratio of upfront proceeds to invested capital to jumped to 2.7x for venture-backed companies sold (up from a factor of 1.6x in 2010). This good result is partially due to the estimated 15x multiple generated by the sale of Advanced Biohealing.
- The sale of Nycomed probably returned the highest-ever absolute amount to private equity investors from a private biopharma company: Investors reportedly received €6 billion (or $8.5 billion) from the transaction. The company at the time of the sale had approximately €3.6 billion ($5.1 billion) of debt. This spectacular deal might trigger further interest of buyout funds in the sector.
Despite having some questions about some of their underlying 2011 data (e.g., Taligen didn’t raise and spend $111M, it was more like half that; Synosia-BioTie was more a reverse merger than an acquisition), its an interesting report and worth reading.