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Beyond Borders: Global biotechnology report 2010

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Without Roche-Genentech, the value of<br />

M&A transactions involving US-based<br />

biotech companies decreased by half in<br />

2009 to a total of US$14.1 billion. Only<br />

US M&As, 1999–2009<br />

Value (US$b)<br />

Pharma-biotech megadeals<br />

35<br />

30<br />

25<br />

20<br />

15<br />

10<br />

5<br />

Pharma-biotech<br />

0<br />

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009<br />

Source: Ernst & Young, Windhover Information, MedTRACK, BioWorld and company news via NewsAnalyzer<br />

Chart excludes Roche’s acquisition of Genentech.<br />

US strategic alliances remain strong<br />

Potential value (US$b)<br />

Pharma-biotech<br />

35<br />

30<br />

25<br />

20<br />

15<br />

10<br />

5<br />

0<br />

Biotech-biotech<br />

three transactions had a value in excess<br />

of US$1 billion. Dainippon Sumitomo<br />

Pharmaceuticals of Japan acquired<br />

Sepracor for US$2.6 billion, extending<br />

Biotech-biotech<br />

Biotech-biotech megadeals<br />

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009<br />

Source: Ernst & Young, Windhover Information, MedTRACK, BioWorld and company news via News Analyzer<br />

Chart shows potential value, including up-front and milestone payments, for alliances where deal terms are publicly disclosed.<br />

82 <strong>Beyond</strong> borders <strong>Global</strong> <strong>biotechnology</strong> <strong>report</strong> <strong>2010</strong><br />

the trend of Japanese companies growing<br />

their operating footprint in the US through<br />

acquisition (see Eisai’s acquisition of MGI<br />

Pharma in 2007 and Takeda’s acquisition<br />

of Millennium Pharmaceuticals in 2008).<br />

Bristol-Myers Squibb deepened its<br />

<strong>biotechnology</strong> capabilities through the<br />

acquisition Mederex for US$2.4 billion.<br />

Meanwhile, Gilead Sciences played white<br />

knight to CV Therapeutics after Astellas<br />

Pharmaceuticals’ hostile bid, paying US$1.4<br />

billion to win over shareholders. Astellas<br />

is clearly interested in expanding its US<br />

presence and in early <strong>2010</strong> returned with<br />

another hostile bid — its US$3.5 billion offer<br />

for OSI Pharmaceuticals. The next largest<br />

acquisition in the US was the US$970<br />

million that Johnson & Johnson paid for<br />

Cougar Biotechnology which was developing<br />

several oncology drugs, including one in<br />

Phase III.<br />

Together, these four transactions comprised<br />

54% of total M&A deal values, including the<br />

value of CVRs. In total, there were only 17<br />

acquisitions of US companies in which the<br />

value changing hands at closing, exclusive<br />

of CVRs, exceeded US$100 million, down<br />

from 23 in 2008. These transactions had an<br />

aggregate value of US$11 billion, well below<br />

2008’s US$29.6 billion.<br />

Alliances<br />

In 2009, US-based biotech companies<br />

entered 132 alliances where financial<br />

terms were disclosed (up slightly from 115<br />

deals in 2008). These transactions had<br />

an aggregate potential value of US$27.3<br />

billion (similar to the prior year’s US$29.6<br />

billion). Of these deals, 97 disclosed upfront<br />

payments, comprised of license fees,<br />

technology access fees and sales of equity,<br />

with a combined value of approximately<br />

US$3 billion — essentially unchanged since<br />

2008. The average up-front in 2009 was

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