Deal volume in the Biotechnology sector is poised to surpass last year’s record-setting 160 transactions. With two weeks left in 2016, deal volume has reached 159 transactions. The activity in this sector shows no signs of abating, and will probably carry through the first half of 2017, at least.
Big Pharma companies are driving the M&A activity, as they actively compete for promising drug candidates to bolster their aging pipelines. A case in point is a deal that hasn’t been announced yet, but that the industry is watching with interest. French pharma company Sanofi (NYSE: SNY) is reported to be deep into acquisition talks with Swiss biotech Actelion Ltd. (XETRA: ACT), and a deal could be announced before the end of the year.
The rumored price is $275 per ACT share, a hefty premium over the approximately $213.00 price Actelion’s shares were trading at on December 16, yielding a potential price of $30 billion.
Even with that huge price tag, this year’s total deal value in the Biotech sector would still be 24% lower than last year’s combined total of $49.0 billion. The current total is just $17.5 billion, down 64% compared with 2015’s total.
There’s still time to close some big deals, of course. Last week saw a $1.85 billion transaction added to the Biotech list. That deal was announced on December 14 by Spanish drug maker Grifols, S.A. (NASDAQ: GRFS) regarding its acquisition of Hologic‘s (NASDAQ: HOLX) interest in their shared blood screening business. Hologic and Grifols have collaborated since 1998 on molecular blood screening, through their predecessor companies. The sale includes Hologic’s blood screening manufacturing facility in Rancho Bernardo, California.
This transaction is part of the consolidation and growth strategy Grifols has for its Diagnostic division, and strengthens its position in transfusion medicine.
The cash price of $1.85 billion will be paid using a $1.7 billion term loan and existing cash. Grifols will receive a fully paid-up license to certain of Hologic’s intellectual property for use in the blood screening field.