The UK’s healthcare sector remains prone to merger and acquisitions, according to provisional figures from the Office of National Statistics (ONS). Apart from big pharma acquiring biotech, recent M&As may change market dynamics and the suppliers of raw materials for pharmaceutical production.
In their quarterly analysis of M&A activity, the ONS estimate that expenditure on UK acquisitions by UK companies increased from £4.2 billion in Q2 to £11.1 billion in Q3 2006. This compares to £6.8 billion in Q1. Boot’s acquisition of Alliance Unichem to form Alliance Boots accounted for a reported £3.4 billion. Alliance Boots are involved in Pfizer’s controversial move to a single distribution channel for POMs in the UK.
Expenditure on acquisitions abroad by UK companies increased from £3.3 billion in Q2 to £6.7 billion in Q3 2006. This compares to £7.4 billion in Q1. For example, during Q3:
- ICI disposed of Uniqema, a Dutch speciality chemical company, which was purchased by Croda International for £410 million. Croda provide ingredients for the nutritional, pharmaceutical and animal health care markets among many other sectors.
- Sage Group, which supplies business management software and services, bought US-based Emdeon Practice Services Inc for £297 million. Emdeon Practice Services produce electronic health records and other software allowing practices to automate clinical and practice management workflow.
Expenditure on UK acquisitions by foreign companies decreased slightly from £18.4 billion in Q2 to £18.1 billion in Q3 2006. This compares to £24.1 billion in Q1. Again, healthcare-related acquisition accounted for a significant proportion. Linde AG bought the BOC group in a deal worth a reported £8.2 billion. The new company will trade under the name "The Linde Group”. Linde is a leading supplier of industrial and medical gases and says it plans to expand its “fast-growing” healthcare section.
Meanwhile, Novartis acquired NeuTec Pharma for a reported £305 million.
NeuTec, a biopharmaceutical company formed in 1997, develops genetically recombinant antibodies against infections such as systemic candidiasis and Staphylococcus aureus including MRSA. The antibodies increase the pathogen’s susceptibility against antibiotics.
This is another example of the continuing trend for big pharma to acquire biotech companies. During Q2, AstraZeneca acquired Cambridge Antibody Technology for a reported £702 million.
Overall, the provisional figure suggest that UK companies made 86 acquisitions abroad, while foreign companies made 58 UK acquisitions. There were 148 domestic acquisitions during Q3. This compares to 92, 59 and 205 respectively during Q2.
by Mark Greener