The healthcare sector saw 1,182 mergers and acquisitions overall in 2018, according to PricewaterhouseCoopers, a 14% rise from the previous year.
And even though the value of those deals fell on a year-over-year basis, 2018 still went down in the books as a great year for healthcare M&A. The natural question then, was whether that trend would continue in 2019.
At the year’s halfway mark, that answer is an emphatic yes.
To date, there has been more than $300 billion in acquisitions in the healthcare sector, more than double the $121.5 billion we saw in 2018. And no fewer than nine of those deals qualify as industry changing.
The largest healthcare acquisition of the year (at least, so far) came on just the second trading day of the year when Bristol-Myers agreed to purchase Celgene in a deal totaling $74 billion in value. That was followed a mere four days later when Eli Lilly acquired Loxo Oncology for $8 billion.
If there was any concern about M&A momentum slowing down, that was put to rest on February 25, when Roche announced its acquisition of Spark Therapeutics for $4.8 billion (on a fully diluted basis), and General Electric announced it was selling its BioPharma business to Danaher for $21.4B
The succeeding months saw Centene buy health insurer rival WellCare for $15 billion, Canopy Growth buy Acreage Holdings for $3.4 billion, and Pfizer acquires Array BioPharma for $11.4 billion.
Turns out, that was all a teaser to the hammer that was dropped last week, with the acquisition of Allergan by AbbVie for $63 billion. Not only was it the sector’s second-largest deal of the year, but it provided some long-awaited clarity for those wondering how AbbVie would position itself when it loses patent protection for its rheumatoid-arthritis drug Humira, the top-selling drug in the world, later this year.
The impetus for most of these acquisitions—specifically the ones by Bristol-Myers, Eli Lilly, Roche, Pfizer, and AbbVie—were the acquiring companies trying to diversify away from their best-sellers and bolster their overall portfolio. The Wall Street Journal has a great graphic showing how exposed some of these companies are to their top-selling drugs.
Source: Wall Street Journal
So, have we reached the peak of the M&A cycle in healthcare? The answer to that is “probably not.”
A survey of healthcare executives conducted by Bank of America/Merrill Lynch and Health Leaders Media released in April found that 68% of respondents expect their organizations’ M&A activity to increase within the next three years, while only 1% of respondents expect activity to decrease.
The author has no positions in any of the securities mentioned
Active Trading with Lightspeed
Lightspeed provides active traders with all the tools required to help them find success in stock trading, and we have been developing and honing our active trader platform to offer the best possible user experience in the marketplace. With the intuitive interface layouts and institutional quality stock and options scanners, we aim to help traders reach their goals, no matter what their strategy is. We also offer our clients some of the lowest trading fees in the industry.
Lime Brokerage LLC is not affiliated with these service providers. Data, information, and material (“content”) is provided for informational and educational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the users independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lime Brokerage LLC does not endorse, offer or recommend any of the services nor information provided by any of the above service providers and any service or information used to execute any trading strategies are solely based on the independent analysis of the user.