A trio of deals amounting to a combined $45bn breathed fresh life into the healthcare mergers and acquisitions boom yesterday as Abbott Laboratories, AbbVie and Sanofi all went shopping for assets.
The largest was Abbott’s $30bn agreed takeover of St Jude Medical in a cash-and-stock deal that will bring together two of the leading US manufacturers of heart-related medical devices.
In a sign that the two-year surge in pharmaceuticals dealmaking has not yet run out of steam, AbbVie and Sanofi set their sights on two San Francisco-based cancer-drug developers.
AbbVie, the US company spun out of Abbott three years ago, agreed a $5.8bn cash and stock deal for Stemcentrx, while France’s Sanofi launched a $9.3bn unsolicited all-cash bid for Medivation.
The latter deal looked to be the most contentious of the three as Sanofi went public with its $52.50 per share bid for the maker of Xtandi, a prostate-cancer drug, after its private approaches were stonewalled.
Sanofi and AbbVie have both targeted oncology as an area for expansion as they seek to reduce dependence on their best-selling products - Lantus for diabetes and Humira for inflammatory diseases, respectively.
Yesterday’s proposed deals lift the value of healthcare transactions launched in 2016 to $121bn, according to data from Dealogic.
This marks the lowest level at this point in the year since 2013, signalling a slowdown from the record M&A volumes of the past two years as drug and medical-device companies hunted for new sources of growth.
The downfall of acquisitive roll-up companies such as Valeant and the collapse this month of Pfizer’s $160bn tax-saving merger with Ireland-based Allergan led some commentators to declare an end to the boom.
“Equity market volatility brought a brief pause to M&A but now that the market has stabilised, I expect we will continue to see a steady stream of deals,” said Jeff Stute, head of healthcare investment banking at JPMorgan.
Investors, however, have become more cautious about M&A; shares in Sanofi fell 2 per cent on news of its Medivation offer, while Abbott was down nearly 6 per cent in early trading. AbbVie’s shares were unchanged.
