Post by tomsylver on Apr 25, 2017 20:41:46 GMT
Biotech M&A Plunges as Trump Attacks Drug Companies (INCY, TSRO)
By Charles Bovaird | April 24, 2017
Biotechnology and pharmaceutical acquisitions totaled $44 billion during the first quarter, 13% less than the same period last year and 35% below the first quarter in 2015, as President Donald Trump has taken aim at drug companies for their high prices, according to Bloomberg. In light of this situation, many companies and investors have decided to sit back and wait until Washington lawmakers take action regarding some key matters.
Widespread Uncertainty
"Nobody knows what is going to happen with healthcare" right now, Brad Loncar, CEO of Loncar Investments, told Investopedia. "It was surprising that a deal didn’t get done last month," he added. "Now, we are hearing that a new bill might get revived soon, but no details about it are known. It is hard for a company to have the confidence to pull off a major deal under that kind of uncertainty." (For more, see also: Stalling Healthcare Reform May Be Holding Up the Rally.)
Should this situation improve, the biotech and pharmaceutical industries could potentially experience an improvement in mergers and acquisitions (M&A) activity, Jeff Greene, global transactions leader for Life Sciences at Ernst & Young, told Bloomberg. "When there is a little bit more clarity on some of the policy issues we could probably see an uptick in M&A," he told Bloomberg.
Potential M&A Waves
Loncar told Investopedia that he foresees two waves of M&A. The first wave, which is already taking place, involves any company that already has a "meaningful revenue generating product" that is either already approved or close to it. Anacor Pharmaceuticals Inc. (ANAC), Medivation Inc. (MDVN) and Actelion Ltd (ATLN) have all been part of this first wave, he said. Loncar identified Incyte Corporation (INCY), Tesaro Inc. (TSRO) and Acadia Pharmaceuticals Inc. (ACAD) as potentially being new targets in this first wave. (For more, see also: Pharmaceutical Vs. Biotech Investing: Is It Worth The Risk?)
After this first wave ends, Loncar predicted there will be a "second wave of M&A that focuses on assets that are earlier stage and more in a developmental stage." He praised this development as a good thing, stating that "innovation is being assigned value again and biotech companies will benefit."
Loncar was not the only one who brought up the importance of innovation, as Bloomberg reported that the industry's general cutback in research and development has made M&A a major source of this creation of new ideas and products.
Bright Spots
Past these developments, a few other factors could fuel M&A, according to Bloomberg. During the first quarter, venture capitalists injected more than $3.4 billion into life sciences companies, PricewaterhouseCoopers figures show. Greg Vlahos, a partner at the firm, told Bloomberg that this figure was the highest since at least 2002, and added that "we're seeing a turnaround for 2017."
www.investopedia.com/news/biotech-ma-plunges-trump-attacks-drug-companies/
By Charles Bovaird | April 24, 2017
Biotechnology and pharmaceutical acquisitions totaled $44 billion during the first quarter, 13% less than the same period last year and 35% below the first quarter in 2015, as President Donald Trump has taken aim at drug companies for their high prices, according to Bloomberg. In light of this situation, many companies and investors have decided to sit back and wait until Washington lawmakers take action regarding some key matters.
Widespread Uncertainty
"Nobody knows what is going to happen with healthcare" right now, Brad Loncar, CEO of Loncar Investments, told Investopedia. "It was surprising that a deal didn’t get done last month," he added. "Now, we are hearing that a new bill might get revived soon, but no details about it are known. It is hard for a company to have the confidence to pull off a major deal under that kind of uncertainty." (For more, see also: Stalling Healthcare Reform May Be Holding Up the Rally.)
Should this situation improve, the biotech and pharmaceutical industries could potentially experience an improvement in mergers and acquisitions (M&A) activity, Jeff Greene, global transactions leader for Life Sciences at Ernst & Young, told Bloomberg. "When there is a little bit more clarity on some of the policy issues we could probably see an uptick in M&A," he told Bloomberg.
Potential M&A Waves
Loncar told Investopedia that he foresees two waves of M&A. The first wave, which is already taking place, involves any company that already has a "meaningful revenue generating product" that is either already approved or close to it. Anacor Pharmaceuticals Inc. (ANAC), Medivation Inc. (MDVN) and Actelion Ltd (ATLN) have all been part of this first wave, he said. Loncar identified Incyte Corporation (INCY), Tesaro Inc. (TSRO) and Acadia Pharmaceuticals Inc. (ACAD) as potentially being new targets in this first wave. (For more, see also: Pharmaceutical Vs. Biotech Investing: Is It Worth The Risk?)
After this first wave ends, Loncar predicted there will be a "second wave of M&A that focuses on assets that are earlier stage and more in a developmental stage." He praised this development as a good thing, stating that "innovation is being assigned value again and biotech companies will benefit."
Loncar was not the only one who brought up the importance of innovation, as Bloomberg reported that the industry's general cutback in research and development has made M&A a major source of this creation of new ideas and products.
Bright Spots
Past these developments, a few other factors could fuel M&A, according to Bloomberg. During the first quarter, venture capitalists injected more than $3.4 billion into life sciences companies, PricewaterhouseCoopers figures show. Greg Vlahos, a partner at the firm, told Bloomberg that this figure was the highest since at least 2002, and added that "we're seeing a turnaround for 2017."
www.investopedia.com/news/biotech-ma-plunges-trump-attacks-drug-companies/