by Nick Hudson
LONDON, Nov 18 (APM) - Growing pressures bearing down on the pharma industry are fuelling a surge in takeover activity in the sector, a conference was told.
Philipp Gutzwiller, global head of healthcare at Lloyds Banking Group, said there is considerable liquidity from lenders with cheap loans on offer, which is also stoking the current run of deals.
"A lot of that is finding a home in the pharma industry," he told the FT Global Pharmaceutical and biotechnology conference in London on Monday. "That would suggest you are in a perfect storm from an M&A perspective and means they are defensive in nature rather than a sign of a buoyant field."
Shire's CEO Dr Flemming Ornskov agreed that loans with low interest rates are helping stoke the current surge in takeovers, saying more bids are likely as companies look to scale up and generate savings.
They were speaking at the conference on the same day Actavis said it is buying Allergan for $66 billion (APMMA 40464).
Ornskov said companies are under increasing pressure from investors to boost profits. "You are going to see continuing consolidation, certainly in the specialist area of the industry. Efficiency-driven deals will continue to happen because if you run out of innovation, you won't get top-line growth and combining with another company gives you more opportunity."
Although the U.S. authorities have taken steps to make overseas acquisitions less attractive from a tax point of view, he said tax savings were still likely to be a driver. "Tax will be one of the may ingredients," while efficiencies of scale would also be a big driver, he said.
Partner at Monitor Deloitte Hanno Ronte agreed that increasing scale is a key component of many takeovers. "Scale does not help to drive innovation per se, but if you are large you can place more bets. Scale does matter in terms of improving the chances of probability of success."
Head of Europe, Middle East, Africa and Canada at technology group Medtronic, Rob ten Hoedt, emphasised his company's planned takeover of Covidien was "strategy driven" rather than motivated by tax.
Executive vice president at AstraZeneca's MedImmune Bahija Jallal told the conference, takeovers were usually an unwelcome distraction, triggering key talent to leave and management taking their eye off the pipeline.
"Does M&A solve productivity? I do not think so," she said.
Meanwhile, Novartis's CEO Joseph Jimenez told the conference more than 400 lawyers are working on an asset swap deal with GlaxoSmithKline, announced in April. He said the deal to swap its vaccines for GSK's later stage cancer portfolio and an agreement with GSK to create one of the biggest over-the-counter businesses in the world is on track for completion next year.
He said there is an anti-trust side to the deal - "you can imagine the complexity of that".
nh/hlc
TRY APM Market Access AND GET ACCESS TO THE FULL CONTENT
Interviews with KOLs/senior executives amongst the Regulators, Payers, Health, Medical & Pharmaceutical organisations
Events coverage with a unique focus on Market Access & sustainability of healthcare systems
6 European bureaus : Berlin, Brussels, London, Madrid, Milan & Paris
Ask for a Free trial and get access to the latest stories
Our coverage includes:
- Health Care
- Market Access
- HTA – policies & practices
- European medicine regulations
- Drug safety issues
- Pricing & Reimbursement
- International medicines agencies
If you are a Payer, Pharmaceutical or Consulting professional our premium data will keep you informed on the regulatory, pricing, market access and cost-effectiveness issues that impact all stakeholders.
REQUEST
an initial 10 day temporary access of APM Market Access.
