A recent flurry of deals in the pharmaceutical sector highlights what savvy investors have known for some time — vaccines are the new M&A targets.
The Wall Street Journal notes on Monday that the recent health scares over global pandemics and the growing involvement of governments in purchasing vaccines en masse have become key driving forces in the thriving world of pharma M&A.
Hence, four big pharma companies announced vaccine-related deals on Monday.
Vaccine sales, as the Journal notes, “are growing faster than sales of other prescription medicines and are largely immune to the generic competition that is already costing drug makers billions of dollars in revenues on their top-selling treatments”.
Moreover, it adds, government agencies both in the US and around the world are increasingly reliable buyers of vaccines as they seek to stockpile medicines in case of a major flu outbreak. And as Reuters notes, vaccine makers are particularly desirable M&A targets for large drugmakers eager to secure new products as exclusivity on existing best-selling products nears an end. They also can be complicated to manufacture, and therefore less vulnerable to eventual generic competition.
In the biggest pharma deal of the week, as the FT reports, Abbott Laboratories confirmed it will acquire a unit of Belgian conglomerate Solvay for €4.5bn, including its vaccine-making business.
On the same day, Johnson & Johnson paid €302m ($441m) for an 18 per cent stake in Dutch biotech company Crucell, in order to jointly develop vaccines. Just months earlier, in July, J&J acquired an 18.4 per cent stake in Irish-American biotech group Elan, which is working on a late-stage drug and vaccine for Alzheimers.
In the third deal, according to the Journal, Merck & Co said on Monday that it obtained, for an undisclosed sum, the US marketing rights to a seasonal flu vaccine from Australia’s CSL.
And to complete a red-hot day for pharma deals, GlaxoSmithKline showed how vaccines can help big drugmakers expand in key emerging markets by sealing a $2.2bn deal with Brazil guaranteeing sales of its pneumococcal vaccine (to prevent pneumonia and meningitis) for 10 years, reports the FT.
Monday’s deals follow Pfizer’s agreement earlier this year to acquire Wyeth, what the Journal terms one of the relatively few big pharma companies known for its vaccine expertise.
Of the day’s deals, however, the J&J transaction, in the FT’s view, is one of the more interesting ones, as “it could transform the flu vaccines market”. Several biotech groups are attempting to develop a vaccine that targets part of the constantly changing flu virus that does not mutate and, the report notes, “that would overturn the current requirement to produce a new vaccine each year to protect against seasonal flu as well as periodic pandemics”.
Related links:
Abbott/Solvay – Lex
Abbott, J&J, strike deals, boost vaccines – Reuters