Overall pharmaceutical deal-making activity fell 18% in 2011 as drugmakers cut R&D expenditure and streamlined their research activities.

That is the key finding in the latest report from UK advisory firm PharmaVentures. According to a review of its database, which contains over 43,000 deal records, licensing pacts fell by 16% "while the most sought-after assets commanded sizeable premiums in 2011". In contrast, M&A activity remained robust in 2011 and deal values actually rose by 30%, although the authors of the report note that contingent payments were commonplace, eg Sanofi's acquisition of Genzyme Corp.

In terms of therapeutic area, the research reveals that "oncology-based deals continued to dominate the landscape" with Roche being the most prolific firm. It also notes that emerging markets remained at the top of the deal-making agenda in 2011, especially India and China.

The report highlights AstraZeneca's proposed acquisition of Guangdong BeiKang Pharmaceutical, a Chinese manufacturer of generic injectable antibiotics, while other big pharma companies "went down the joint venture route", notably the Bayer/Zydus Cadila and Merck & Co/Sun Pharmaceutical Industries alliances in India.

Fintan Walton, PharmaVentures chief executive, noted that the industry is undergoing "a rapid and major transformation driven by declining R&D productivity and blockbuster drugs coming off-patent". However, "with quality assets commanding higher premiums there is still a significant opportunity for great deals to be done,” he added.