The pharmaceutical, medical and biotech sector led merger and acquisition activity in the UK during the first half of 2014, accounting for just under 27% of total deals in the country during the period, according to new figures.
33 M&A deals were announced in the sector in the period, with a total value of just over £10.1 billion, according to Mergermarket’s UK M&A Trend round-up of agreements for the half-year. This compares with a total of 29 deals within the UK pharma/medical/biotech sector reported for the first half of 2013; these were valued at just £816 million and accounted for only 1.9% of the total for that period.
The latest figures for pharma/medical/biotech are line with the sector’s global activity during the period, with a 16.5% market share. However, the UK result was dominated by the £8.6 billion acquisition of GlaxoSmithKline (GSK)’s oncology division by Novartis. This agreement, announced on April 22 and worth £8.6 billion, was the only mega-deal – valued at more than $5 billion – to be reported across all UK business sectors during the half year.
Under the agreement, GSK is selling its portfolio of cancer drugs to Novartis for up to $16 billion ($14.5 billion upfront and $1.5 billion in milestones) and buying Novartis’ vaccines unit, excluding flu vaccines, for up to $7.1 billion ($5.25 billion upfront, $1.8 billion in milestones). The two firms have also agreed to create a “world-leading consumer healthcare business” through a joint venture between Novartis OTC and GSK Consumer Healthcare.
Commenting on the half-year figures, the Mergermarket report points out that the proportion of pharma/medical/biotech M&A in the UK would have been even larger if the £69 billion proposed acquisition of AstraZeneca by Pfizer had gone through.
The fact that GSK/Novartis was the only mega-deal announced across all UK business sectors during first-half 2014 dragged total values down to £37.5 billion, which is the lowest half-year result since £37 billion in first-half 2010, and represents a decline of 12.5% since first-half 2013’s total of £42.9 billion.
However, the second quarter of this year witnessed a stark improvement compared with the previous quarter, soaring a massive 156.5%, from £10.5 billon to £27 billion, and representing the highest quarterly value for the UK since second-quarter 2012, says the report.