US leads M&A activity in pharmaceuticals to $2.4 trillion high over ten years

08 March 2017 Authored by Consulting.us

Pharmaceutical industry spending on mergers and acquisitions has soared to more than $2.4 trillion in the past decade. The industry now accounts for 9% of global M&A deal activity.

Globally, and in North America, the mergers and acquisitions (M&A) market has consolidated its recovery following the financial crisis. In 2016 worldwide M&A activity impressed with a total value of $3.2 trillion, down on 2015’s bumper $3.96 trillion but still marking one of the best years in the past decade.

The US and Canada accounted for almost $1.5 trillion, or 47.5% of global M&A activity, according to data from Mergermarket. Almost 5,000 deals from a worldwide total of 17,000 took place in North America. Only in 2015 was a better performance recorded in the region, with $1.9 trillion of activity spread across almost 5,300 deals. 

Flaunting a large number of mega-deals, the pharmaceutical industry has been at the center of robust M&A activity, both in the US and globally. With the medical and biotechnology sectors under the pharmaceutical umbrella, on average the industry accounted for 8.75% of the total M&A market over the past ten years. In 2009 pharmaceutical industry contributions to global M&A activity reached a share of 13.% ($227.7 billion). In 2013 this rose to $379.9 billion despite the relative share falling to 11.7%.

Value of pharmaceuticals M&A globally

In 2015 M&A activity in the North American pharmaceutical sector dropped slightly but still made up almost $300 billion of the worldwide total of $392.4 billion - the highest figure in ten years. Pharmaceutical contributions to global M&A activity haven’t been as strong from the US and Canada in 2016, totalling a combined $177 billion. This still towered over the $57 billion raised in Europe, which more than doubled its value from 2015. A Japanese mega-deal - Canon bought Toshiba Medical Systems Corporation for $5.9 billion - saw Japan’s pharmaceutical M&A value leap from $2.9 to $7.3 billion in 2016.

Value of M&A in the gloabl pharma industry - by-region

Mega mergers

Such mega-deals are central to the pharmaceutical world’s M&A activity, especially in the US. Last year the acquisition of Baxalta by Irish outfit Shire for $35.2 billion was the fifth largest US-based M&A deal. The biggest pharmaceutical M&A in history also took place on American soil - in 1999 Pfizer acquired Warner Lambert for $84.3 billion. The American giant is also in the record books for the 2002 $63.8 billion purchase of Pharmacia and the 2009 acquisition of Wyeth for $48.9 billion.

The 10 largest transactions in the pharma industry

Among the top ten pharmaceutical mega-deals, six have taken place in the past decade. The 2016 takeover of Monsanto by German chemical giant Bayer or $58.2 billion stands out as the largest since French pharmaceutical multinational Sanofi merged with Aventis in 2004.

The US features prominently on the list with American company Allergan making two appearances, alongside US-based Abbvie and Merck & Co. In January 2017 the 13th largest pharmaceutical M&A deal in history saw Johnson & Johnson acquire Actelion for almost $30 billion.

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