Sector News

Roche says ‘no thanks’ to megadeals, but don’t count out smaller M&A

January 23, 2019
Life sciences

After two recent, huge tie-ups between Takeda and Shire and Bristol-Myers Squibb and Celgene, megamergers seem to be a biopharma trend. But Roche isn’t interested, its chairman said.

The company is “extremely cautious when it comes to any kind of megamerger,” Roche Chairman Christoph Franz told CNBC at the World Economic Forum in Davos, Switzerland. Not only are huge deals costly, money-wise, but integrating big buyouts costs time and effort that’s “deviating you, maybe from some of your core activities, like, for example, research and development,” Franz told the network.

“That’s the reason why we are focusing on targeted ideas, outside our company, and then creating partnerships,” Franz said, adding that in some cases Roche would do some small- or medium-sized deals.

Franz’s comments come after this month’s $74 billion merger announcement between Bristol-Myers Squibb and Celgene, which ranks among pharma’s largest-ever deals. Also this month, Takeda closed its $62 billion buyout of Shire.

Some industry watchers questioned the motives behind those deals, and insiders at Takeda pushed back against its own proposed buyout. But while the long-term results of those acquisitions remain to be seen, Franz said his company isn’t in a position where it needs to scoop up another large pharma.

“We are benefiting from one of the best innovative pipelines, with new medicines upcoming, so there is no need to focus on acquisitions to create size,” he told CNBC.

It’s a position shared by Pfizer’s new CEO Albert Bourla, who once again swore off a megadeal during his conversation at the J.P. Morgan Healthcare Conference in San Francisco. Asked by JPMorgan analyst Chris Schott about M&A, Bourla said the company has a “unique window of opportunity to get it right with our pipeline and the new launches,” and that he doesn’t want to do a “distractive” deal.

While some top pharma execs plan to stay away from megamergers, that doesn’t mean M&A will slow entirely. Even after Bristol’s megadeal, Eli Lilly struck an $8 billion buyout of cancer specialist Loxo Oncology in early January. And GlaxoSmithKline just closed its $5 billion deal for cancer drugmaker Tesaro.

Market watchers expected an M&A boom in 2018 after U.S. tax reform, but smaller companies’ share prices—and hence valuations—remained high, putting a drag on M&A activity. Now, with lower valuations, a “pent-up demand” for buyouts and other factors, Michael Levesque, senior vice president at Moody’s, previously told FiercePharma he believes there will be an uptick of M&A this year.

By Eric Sagonowsky

Source: Fierce Pharma

Join the discussion!

Your email address will not be published. Required fields are marked *

Related News

January 23, 2021

Thermo Fisher Scientific acquires Novasep’s Henogen for $874.5m

Life sciences

Thermo Fisher Scientific has acquired Novasep’s viral vector manufacturing business in Belgium, Henogen, for about €725m ($874.5m) in cash. Henogen offers biotechnology firms, as well as biopharma customers contract manufacturing services for vaccines and therapies.

January 23, 2021

Lilly and Merus partner to develop T-Cell re-directing antibody therapies

Life sciences

Research and development group of Eli Lilly and Company, Loxo Oncology at Lilly, and clinical-stage oncology company Merus have announced a research collaboration and exclusive license agreement to develop T-Cell re-directing bispecific antibodies.

January 23, 2021

Adagene plans $125M IPO to go after cancer niches targeted by BMS and Pfizer

Life sciences

Chinese cancer biotech Adagene has filed to raise up to $125 million in a Nasdaq IPO. The listing will give Adagene the means to run early-phase clinical trials of antibodies against CD137 and CTLA-4.

Send this to a friend