GOTTA LOVE THESE STORIES, ONE DAY : Big Drugmakers Pay Big Prices for Promising Biotechs -- Update
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Today : Monday 22 January 2018
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By Jonathan D. Rockoff
Big drugmakers, searching for new sources of revenue, are paying hefty premiums for biotechnology businesses, with two multibillion-dollar acquisitions announced Monday among the latest such deals.
Sanofi SA agreed to pay $11.6 billion in cash, a 63% premium, to buy hemophilia-drug company Bioverativ Inc., confirming a Wall Street Journal report Sunday.
And Celgene's cash deal to buy Juno Therapeutics Inc. values shares in the biotech company at $9 billion, 87% more than their worth before the Journal reported on the deal talks last week.
So far this year, the median premium paid in health-care deals worth more than $1 billion is 89%, almost double the median of 45% since 2010, according to Dealogic.
Both Sanofi and Celgene have been looking to add products to cope with lower-price competition looming for their top-selling drugs.
As big drugmakers look to deal-making, rather than their own laboratories, to plug gaps in their product lineups, they are increasingly willing to pay up for the scarce roster of companies with promising products.
And analysts say premiums may only get bigger as other large drugmakers, aided by the new tax law in the U.S., consider acquisitions to bolster their lineups.
"Many of the largest, most cash-rich companies in the industry have not even begun to participate in M&A, and when they do, prices and deal volumes could step up significantly," Leerink Partners analyst Geoffrey Porges wrote Monday in a note to investors.
Paris-based Sanofi has already missed out on two high-valuation deals. It lost the bidding for Medivation to Pfizer Inc., which paid $14 billion for the cancer biotech company in 2016.
Then last year, Johnson & Johnson outbid Sanofi to buy rare-disease drugmaker Actelion for $30 billion.
Bioverativ, of Waltham, Mass., sells two top-selling treatments for the rare blood disorder hemophilia. The company was spun out of big biotech Biogen Inc. last year after Biogen couldn't find any companies willing to buy it for about $3 billion, according to a person familiar with the matter.
Sanofi turned to Bioverativ as low-price competition drew closer for the French company's top-selling product, Lantus insulin. Lantus revenue has been dropping but still accounted for 13% of Sanofi's sales during the first nine months of 2017.
Bioverativ's hemophilia drugs will fit in Sanofi's rare-disease business and complement the company's collaboration with biotech Alnylam Pharmaceuticals Inc. in developing a new kind of hemophilia therapy using an emerging technology called RNA interference.
