Big pharma not making as much acquisitions as mid size pharma this year

[ginfreely]

https://seekingalpha.com/news/37131...-lead-bigger-rivals-in-acquisitions-this-year​

Mid-size pharmaceutical firms lead bigger rivals in acquisitions this year​

Jul. 07, 2021 6:49 AM ETHZNP, JAZZ...By: Dulan Lokuwithana, SA News Editor

 

[ginfreely]

• Concerned over high premiums of targets, the large-cap pharmaceutical companies have taken a backseat in acquisitions this year as they focused on repayment of debt accumulated due to previous deals.
• Meanwhile, with the need to sustain the long-term growth, their medium size rivals have picked up the slack thanks to new sources of capital.
• So far in 2021, the midcap drug companies have executed nine deals valued at $13.1B, nearly twice the amount spent by their larger rivals on eight acquisitions, The Wall Street Journal reported citing data from Evaluate Group Ltd.
• Some of the biggest deals cited in the report include the acquisition of GW Pharmaceuticals (NASDAQ:GWPH) by Jazz Pharmaceuticals (NASDAQ:JAZZ) for $6.7B and other mid-cap dealmakers such as Horizon Therapeutics (NASDAQ:HZNP)and MorphoSys AG (NASDAQ:MOR).
• “That’s a sign of their maturity, and the expanded scope of the capital markets for these companies that were previously largely shut out,” SVB Leerink analyst Geoffrey Porges points out.
• Large-cap pharma companies such as AstraZeneca (NASDAQ:AZN), AbbVie (NYSE:ABBV), and Pfizer (NYSE:PFE) have dominated the deal-making over the past ten years. From 2016 to 2020, the group has splashed out $452.3B in 178 deals in comparison to $55.8B spent by mid-size players at 155 deals.
• According to analysts, big pharma has taken aback this year due to a lack of targets that they think could meaningfully boost their operations. In addition, the fear of anticompetitive concerns from regulators and premiums of targets that have exceeded 65% in recent years have also contributed.
• Highlighting the risks of acquisitions, Jefferies analyst David Steinberg noted: “One transaction can sink a company, particularly if it’s a very large acquisition relative to the size of the company.” According to Porges, new ways to fund transactions have helped drive the recent M&A activity.
• Last month, a strategic funding partnership with Royalty Pharma (NASDAQ:RPRX) helped mid-cap biotech MorphoSys to strike an agreement to acquire Constellation Pharma (NASDAQ:CNST) for $1.7B in cash.