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Pharmaceutical industry

Biopharmaceutical Deal-Making on the Rise in U.S. and Europe

Strategic Insights

— 1 min read

The soaring costs of research and development, coupled with growing government efforts to control healthcare costs, are driving a surge in biopharmaceutical deal-making between U.S. and European companies. In the first half of 1995, pharmaceutical and biotechnology firms announced 44 cross-border deals worth $9.5 billion, a significant increase from the $7.5 billion in the same period of 1994. The trend is expected to continue, with large pharmaceutical players leading the way in mega-mergers and mid-sized European companies partnering with U.S. biotechnology firms.

Key Takeaways:

  • 44 cross-border deals worth $9.5 billion were announced in the first six months of 1995, up from $7.5 billion in the same period of 1994.
  • The largest cross-border deal was the $7.1 billion acquisition of U.S.-based Marion Merrell Dow by Germany's Hoechst AG.
  • U.K. pharmaceutical companies led the Europeans in mergers and acquisitions, targeting U.S. technology firms.
  • Large pharmaceutical companies are attempting to control a larger piece of the managed care premium dollar through vertical integration.
  • Mega-mergers, as seen in the proposed Ujohn/Pharmacia $13 billion deal, will dominate the deal-making arena.
  • Mid-sized European pharmaceutical companies will partner with U.S. biotechnology firms, potentially modeling the way for the European and Pacific rim markets to drive the biotechnology industry forward.

Statistics:

  • 44 cross-border deals worth $9.5 billion were announced in the first six months of 1995.
  • The largest cross-border deal was the $7.1 billion acquisition of U.S.-based Marion Merrell Dow by Germany's Hoechst AG.
  • The proposed Ujohn/Pharmacia deal is worth $13 billion.
  • U.S. and European biopharmaceutical deal-making is expected to continue, with large pharmaceutical players leading the way.

Sources:

  • KPMG Peat Marwick
  • KPMG's Health Care & Life Sciences Practice
  • "KPMG Peat Marwick Study Reveals Spiraling Costs of Research and Development Are Driving U.S. and European Biopharmaceutical Deal-Making" (HealthWire, August 30, 1995)
  • Robert Esposito, national director of the biotechnology and life sciences for KPMG's Health Care & Life Sciences Practice.

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