Takeda, Lilly, Lead $28.5 Billion In Biotech Deals, Report Says
European biotechnology deals added up to $5 billion more last year, led by Novartis AGs acquisition of Speedel Holding AG, according to a report today by Ernst & Young Global Ltd., a London-based consulting firm.
More than 4,000 biotechnology companies manipulate genes and cells, largely to develop drugs for cancer, arthritis and other diseases. Large drugmakers are investing in biotechnology to bolster revenue as patents on top products expire. In the largest deal of the year, Osaka-based Takeda bought Millennium Pharmaceuticals of Cambridge, Massachusetts, for $8.8 billion.
“The attention right now may be on the financial crisis which certainly had an impact on biotech investment, but 2008 was still a near-record year for mergers and acquisitions,” said Glen Giovannetti, head of Ernst & Youngs biotech group, in an interview.
Acquisitions of U.S. biotech companies reached a record $33 billion in 2007, led mostly by London-based AstraZeneca Plcs $15.6 billion purchase of flu vaccine maker MedImmune Inc., Ernst & Young said. Excluding that unusually high transaction, 2008 had the highest deal total ever, the consulting firm said.
Drugs with about $24 billion in annual sales are set to lose patent protection this year, according to IMS Health Inc., the Norwalk, Connecticut-based research firm. Last year, medicines with annual revenue of about $10 billion lost patents.
Financing Declines
U.S. and European biotechnology companies raised $16 billion in capital, a 46 percent decline from a year earlier, according to the Ernst & Young report. Funding from initial public offerings plunged 95 percent to $116 million from $2.3 billion as the global recession intensified. Biotech venture financing fell only 19 percent to $6 billion after a record high in 2007.
Takeda agreed to pay $8.8 billion for Millennium on April 10, 2008, gaining the blood-cancer medicine Velcade. By 2011, Takeda will lose patent protection for products including its diabetes drug Actos, which account for 40 percent of revenue.
In the second-biggest deal of the year, Life Technologies Corp., formerly known as Invitrogen Corp., agreed to buy Applied Biosystems Group for $6.7 billion on June 12. The Carlsbad, California-based company gained the biggest maker of equipment to decipher DNA as scientists race to make gene testing more widely available.
Lillys ImClone Purchase
Lilly, of Indianapolis, agreed to purchase New York-based ImClone Systems Inc. for $6.5 billion on Oct. 6, gaining the cancer drug Erbitux as well as several experimental tumor treatments.
Revenue of publicly traded biotechnology companies grew 12 percent to $89.7 billion last year, according to the Ernst & Yong report. The global industrys net losses shrank to $1.4 billion from $3 billion a year earlier.