Abstract
Expert analysis and detailed case histories illuminate the effect on, and
activities of, pharmaceutical companies in the current economic downturn.
Mergers and, more commonly, acquisitions have long been popular in the
pharmaceutical industry. Whether it has been to support flagging drug
pipelines, secure IP on promising drug candidates or to quickly access new
markets, the industry has for many years been characterised by a vibrant M&A
culture. The current recession has, therefore, had a significant impact on the
industry' s players, and in more ways than might be immediately obvious.
The limited availability of credit to fund - through share issue or capital
loans - drug discovery programmes, has denied many development companies the
ability to progress independently. At the other end of the scale, high-profile
acquisitions have had to be funded from cash. The ability of companies to
operate on this basis has been limited by the level of liquidity they hold and
an increased awareness of the short-term benefits of revenue increase and cost
savings.
Activity expands
The nature of the recession and the limited access to credit has sparked a
round of mergers and acquisitions. Companies unable to secure the finance they
need have been opportunistically targeted by those with the means to buy.
This report provides a complete and thought-provoking assessment
The Recession and its Impact on Pharmaceutical M&A Activity is a
closely-argued analysis of how the recession has affected the industry.
It considers three elements:
- The recession - a detailed examination of the recession, its causes
and effect
- The industry' s relationship with financial markets - the use of
credit and the role played by shares in the movement of working capital
- Responses - how the industry has responded to the changes and
challenging circumstances.
In 62 information-packed pages this report answers key questions:
- Why has this recession been so severe and what distinguishes it from other
economic downturns?
- Why has the pharmaceutical industry been especially hard hit?
- Does this recession raise questions about how drug development is funded?
- To what degree did the recession and its effect on capital markets make CV
Therapeutics vulnerable to takeover?
- What are the prospects for future deals and which companies might be
involved?
Case histories provide detailed insights
The report looks at a range of recent deals and examines the motivations and
dynamics which underpin them.
- Gilead - CV Therapeutics
- Johnson & Johnson - Cougar Biotechnology
- GlaxoSmithKline - Stiefel
- Pfizer - Wyeth
- Merck & Co - Schering- Plough
- Roche - Genentech
About the Author
This report has been researched and written by Economist Simon Ward. Simon has
many years experience in observing and reporting on international health
company developments. In addition to this report, he was for many years editor
of Medical Device Companies Analysis and has produced a number of reports for
Espicom.
Table of Contents
Introduction - The Recession Defined
Part 1 - The Recession Traced
- Roots
- Figure 1: US Consumer Debt Jan. 2001 - April 2009
- Figure 2: Quarterly US Consumer Debt Ratio 2001 - 2008
- Problems in the Financial Markets
- Figure 3: European Interbank Lending Rates (EURIBOR)
- How to Stem the Tide
- Figure 4: Average Interest Rates charged on short terms loans to business
- Figure 5: Euro and US Monthly Commercial Paper Rates 2003 - 2009
- Figure 5: US Manufacturing Index February 2001 - May 2009
- The Real Economy
- Figure 6: US Manufacturing Index January 1972 - May 2009
- Figure 7: Month on Month % Change in US Manufacturing, January 1972 - May 2009
Part 2 - Immunity Declined
- Immunity Explained
- Development-Stage Companies
- CV Therapeutics
- Table 1: CV Therapeutics' Accounts
- Figure 8: CV Therapeutics Cash Flows
- Amylin Pharmaceuticals
- Table 2: Amylin Pharmaceuticals Accounts
- Figure 9: Amylin Pharmaceuticals Cash Flows
- The Ability to Manufacture and Positive Cash Flow
- Table 3: CV Therapeutics Underlying Loss and Finance Income 2000 - 2008 (US$ million)
- Figure 10: CV Therapeutics Underlying Loss and Finance Income 2000 - 2008
- Generics
- Figure 11: Diflucan Annual Sales
- Figure 12: Lipitor Annual Sales
- Figure 13: Lipitor Cumulative Revenues from 1999
- Figure 14: US Pharmaceutical and Medicines Index
Part 3 - The Response
- Mergers and Acquisitions
- Gilead - CV Therapeutics
- Table 4: Gilead Accounts
- Table 5: Gilead Principal Product Sales and Forecasts
- Figure 15: Gilead Principal Products Sales and Forecasts
- Johnson & Johnson - Cougar Biotechnology
- Table 6: Johnson & Johnson Accounts
- Table 7: Cougar Biotechnology Accounts
- Table 8: Johnson & Johnson - Selected Product Sales and Forecasts
- Figure 16: Johnson & Johnson - Selected Product Sales and Forecasts
- GlaxoSmithKline - Stiefel
- Table 9: GlaxoSmithKline Accounts
- Table 10: GlaxoSmithKline - Selected Product Sales and Forecasts
- Pfizer - Wyeth
- Table 12: Wyeth Accounts
- Table 13: Pfizer Selected Product Sales and Forecasts
- Table 14: Wyeth Selected Product Sales and Forecasts
- Figure18: Pfizer and Wyeth Leading Product Sales and Forecasts
- Figure19: Pfizer and Wyeth Combined Sales
- Merck & Co - Schering-Plough
- Table 15: Merck & Co Accounts
- Table 17: Merck & Co Selected Product Sales and Forecasts
- Table 18: Schering-Plough Selected Product Sales and Forecasts
- Figure 20: Merck & Co and Schering-Plough Selected Product Sales
- Roche - Genentech
- Table 19: Roche Accounts
- Table 20: Genentech Accounts
- Table 21: Roche Selected Product Sales and Forecasts
- Figure 21: Roche Selected Product Sales
- Table 22: Reported M&A activity from 1st December 2008 to 2nd July 2009
- Anticipated Deals
Conclusions
