North American Pharma & Life Sciences M&A Update – March 2010

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There was a sizeable jump in deal announcements in the pharma and life sciences sector in March, with 22 deals as compared to February’s 17.

Included in the announcements was Japan-based Astellas Pharma’s $3.5 billion hostile bid for US biotech OSI Pharmaceuticals. The bid represented a 40% premium to OSI’s closing share price and is expected to attract rival bids from other suitors.

Canadian companies accounted for three of the deals: Paladin Labs acquisition of a minority stake in South African-based Pharmaplan; Atrium Innovations acquisition of Planet Organic subsidiary, Trophic Canada and Biovail Pharmaceuticals’ acquisition of US-based Cortex Pharmaceuticals.

Close to half, 45% (10), were cross border. Six North American companies sold to buyers from Japan, France, Ireland, Spain, Italy and Israel and four North American companies made investments in South Africa, Australia, Germany and the UK.

Private equity and venture capital funds remain active, investing in 5 companies and divesting of 3 across the subsectors.

This month, there were 10 carve-out transactions indicating that companies are realigning and focussing their operations.

On a subsector basis, drug development deals dominated activity, accounting for 59% (13) of all deal announcements, followed by pharma services 27% (6) and medical devices 14% (3).

IPOs - Initiating Coverage

North American Healthcare new issues activity continues to strengthen with a total of 17 IPOs since the beginning of 2009. On a sub-sector basis, Biotech and Pharmaceuticals accounted for over 50% of activity. In Q1 10, there were 4 Biotech new issues, a positive indicator for venture capital investment in early stage companies.

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