Although the number of transactions within the global pharmaceutical and biotechnology sector fell (from 548 to 504) between 2010 and 2011, deal values rose 75% to $90 billion during the same period.

That is the key finding from a report launched by IMAP, a global partnership of leading M&A and corporate finance firms. It notes that the larger end of the market was more active with deals in the $100 million-$1 billion increasing from 31 to 81. Six of the 15 largest pacts targeted R&D companies and included the $11.2 billion acquisition of Pharmasset and its investigational hepatitis C treatments by Gilead Sciences.

R&D companies in demand

Ramesh Jassal, senior healthcare analyst at Clearwater Corporate Finance, IMAP’s UK member firm, said: “It is no secret that pipelines have dried up for many of the largest pharmaceutical companies, which has sparked a spate of M&A activity for small niche providers and R&D teams". He added that as "good new drug candidates are extremely hard to find, we expect demand for mid-stage drugs to remain high and valuations to continue to rise".

The report also notes that the Chinese pharmaceutical market grew 24% in 2011, boosted by expanding health insurance and wider healthcare reforms. However, Mr Jassal points out that 76% of that market is dominated by generic, making it difficult for European and US multi-nationals to tap into opportunities, "only being able to take a 2.5% share of the $147 billion market available".