Pharmaceutical and Medical Device Manufacturers Continue to Drive Deal Activity
NEW YORK, May 20, 2014 – Pharmaceutical and life sciences (PLS) merger and acquisition (M&A) volume increased 53.1 percent in the first quarter of 2014, highlighting the expected increase in deal activity from the previous year, according to Pharmaceutical and Life Sciences Deals Insights Quarterly, a quarterly analysis of M&A trends and outlook for the PLS sector issued today by PwC US.
“The first quarter of 2014 began where 2013 left off with the continuation of robust M&A activity in the PLS industry. CEOs are increasingly optimistic about their companies’ prospects and are seeking opportunities to grow their businesses through adopting new technologies, optimizing shareholder value and diversifying their portfolios,” said Dimitri Drone, U.S. pharmaceutical and life sciences deals leader, PwC. “We’re working with clients in developing strategies to reassess and realign their portfolios in light of the evolving industry dynamics and ultimately helping to expand their businesses.”
There were 49 PLS transactions in the first quarter of 2014, compared to 32 deals in the fourth quarter of 2013. Total deal value also jumped more than 20 percent to $44.9 billion in the first quarter of 2014 compared to approximately $37.2 billion in the fourth quarter of 2013. On an annual basis, deal volume and value increased 40 percent and 122.6 percent, respectively, in the first quarter of 2014 compared to the first quarter of 2013.
Thirteen divestitures were completed in the first quarter of 2014, representing a total value of $10.1 billion – a trend that may continue or accelerate in the coming quarters as PLS companies continue to look for opportunities to optimize shareholder value and develop new business models. Additionally, strategic alliances and joint ventures remain the primary vehicles for deal activity in the PLS industry.
Looking at the PLS industry sectors, medical device manufacturers remained active in deal activity with 19 total deals in the first quarter as companies are evaluating opportunities that will have an impact on their businesses through adopting new technologies to improve patient experiences and outcomes. Additionally, pharmaceutical companies represented 16 deals in the first quarter and are seeking opportunities to unlock shareholder value through divestitures while gaining strength in their core businesses.
Biotechnology companies continue to add pressure on pharmaceutical companies as they are looking to diversify their product portfolios and gain scale through M&A. After a pause in deal activity, the diagnostics and services sectors returned to the deals table through a continued focus on R&D effectiveness, advances in personalized medicine, and the emergence of new technologies – a trend that is likely to drive continued M&A interest.
“We can expect to see continued PLS M&A activity in 2014 as strong equity markets, overall economic stability, and trends within the individual sectors are creating an environment ripe for further investor interest in the industry,” concluded Drone.
PwC’s Deals practitioners help corporate and private equity executives navigate transactions to increase value and returns. In today's increasingly daunting economic and regulatory environment, our experienced M&A professionals assist clients on a range of transactions from smaller and mid-sized deals to the most complex transactions, including domestic and cross-border acquisitions, divestitures and spin-offs, capital events such as IPOs and debt offerings, and bankruptcies and other business reorganizations. We help clients with strategic planning around their growth and investment agendas and advise on business-wide risks and value drivers in their transactions for more empowered negotiations, decision-making and execution. We help clients expedite their deals, reduce their risks, capture and deliver value to their stakeholders and quickly return to business as usual. Our local and global deal strength is derived from over 1,500 deal professionals in 35 cities in the U.S. and over 13,400 deal professionals across a global network of firms in 75 countries. In addition, our network firm PwC Corporate Finance provides investment banking services within the U.S. For more information, visit www.pwc.com/us/deals.
About PwC’s Health Industries Group
PwC’s Health Industries Group (www.pwc.com/us/healthindustries) is a leading advisor to public and private organizations across the health industries, including healthcare providers, pharmaceuticals, health and life sciences, payers, employers, academic institutions and non-health organizations with significant presence in the health market. Follow PwC Health Industries at @PwCHealth.
About PwC US
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