Pharmaceutical News: Decade in Review: Pharmaceutical Sector Leads Health Care M&A
Analyst upgrades Simcere Pharmaceutical Group to ‘outperform’ from ‘perform’
Simcere Pharmaceutical Group is poised to gain from a Chinese pharmaceutical market that may surpass Germany to become the world’s third largest this year, according to an Oppenheimer analyst.
Katherine Lu said in a research note Friday that the Chinese company’s focus on proprietary drugs, first-to-market generics and over-the-counter drugs has set up Simcere to benefit from China’s increased medicine use driven by health care reform. She also said the drugmaker’s net margin improvement will be a strong driver for profit growth in the next few years.
Lu upgraded the company to “outperform” from “perform” and established a 12- to 18-month price target of $15.50.
“We like (Simcere) as an attractive turnaround story, well positioned to benefit from China’s growing domestic pharmaceutical market,” the analyst said.
Decade in Review: Pharmaceutical Sector Leads Health Care M&A
According to Deal Search Online, an Irving Levin Associates M&A database, there has been a total of 1,431 pharmaceutical M&A deals, totaling $632.3 billion dollars committed to the industry during the ten-year period ended December 31, 2010. Pharma was the single most active sector of the health care industry in the decade’s health care M&A market, accounting for roughly 40 percent of all dollars spent during the decade. The high cash flow pharmaceutical companies possessed also helped drive M&A activity in the biotechnology sector. With high cash flow, big pharma also drove much of the M&A activity in the biotech sector.
The five largest pharmaceutical M&A transactions reported in 2010 are listed below.
1. Teva Pharmaceutical Industries acquired Ratiopharm for $4.97 billion
2. Biovail Corp. acquired Valeant Pharmaceuticals International for $3.86 billion
3. Abbott Laboratories acquired Piramal Healthcare Limited for $3.72 billion
4. Pfizer, Inc. acquired King Pharmaceuticals, Inc. for $3.6 billion
5. Eisai Company Inc. acquired the rights to market Lorcaserin for $1.37 billion
In the most recent year, 2010, over $38.7 billion was committed to pharmaceutical M&A, a 74 percent decrease from 2009’s decade high total of $147.2 billion. There were 127 mergers and acquisitions announced last year, a 9.3 percent decrease from 2009’s 140 deals. This marked the second lowest total in deals per year over the last decade; in 2001 just 87 pharmaceutical M&A transactions were reported. However, the data is somewhat misleading. We note that 2009’s decade-high in dollars committed was in large part due to two first quarter mega deals, which combined for $109.1 billion. Pfizer, Inc. acquired Wyeth, Inc. for $68 billion and Merck & Co., Inc. acquired Schering-Plough Corp for $41.1 billion. Therefore the drop off since last year in terms of the number of deals or dollars committed was not as significant as one might assume by simply glancing at the data.
Fuan Pharmaceutical To Issue 33.40M Shares In IPO
March 4 – Chongqing Fuan Pharmaceutical Group (300194) plans to offer 33.4 million shares in its initial public offering (IPO) on ChiNext Board, reports p5w.net, citing a company filing. Post-IPO total equity will not exceed 133.4 million shares.
The source noted that 6.63 million shares will be issued off-line, accounting for 19.85 percent of total issuance.
Fuan Pharmaceutical researches, produces and sells antibiotic raw materials.
Proceeds will go to the production of antibiotics raw materials, antibiotics preparation and product research, together costing roughly 408 million yuan.
Remaining proceeds will be used to supplement operating cash flows.