M&A und Allianzen in Life Science Aktuelle Entwicklungen und Trends

Transcription

1 M&A und Allianzen in Life Science Aktuelle Entwicklungen und Trends Symposium Life Science am Kapitalmarkt Frankfurt, 3. Juni 28

2 Global biotech industry Strong growth in most areas but Visible product progress in Europe Record deals Booming financings More approved products; progress in Phase II 27 with unprecedented deal values VC sets new record of US$7.4 billion Page 2

3 Product development Visible pipeline progress in Europe European product pipeline by phase Number of product candidates in studies Pipeline by phase and major countries Number of product candidates in studies Phase III Phase II Phase I Preclinical Preclinical Phase I Phase II Phase III UK GER DK F CH IT Source: Ernst & Young and company websites (Estimates show data for public and private companies that report pipeline information) Page 3

4 Product development Visible pipeline progress also in Germany 7 4 Page 4

5 Global biotech industry but also challenges, especially in the US Safety concerns Regulatory challenges emerge Public equity markets cool Several new black box warnings Lowest FDA NME approvals in 25 years Credit crunch drives flight to safety Page 5

6 Uncertain public equity markets Companies considering IPOs don t expect the markets improve soon IPO as preferred exit by time planned; share of companies 1% 8% 6% 36 months 52% 36 months 62% 4% 2% 24 months 39% 24 months 32% % 12 months 9% US 12 months 6% Europe Source: Ernst & Young company survey. Chart only shows companies that are planning IPOs. Page 6

7 Uncertain public equity markets thus most companies are planning on M&As or dual tracking for exits Preferred exits; share of companies 1% 8% 6% M&A only 4% M&A only 57% 4% 2% Dual tracking 45% Dual tracking 27% % IPO only 16% US IPO only 16% Europe Source: Ernst & Young company survey. Chart does not include companies not planning exits, or planning exits other than IPOs or M&As. Page 7

8 Long-term outlook: reinvention Page 8

9 Reinvention The drug industry is being reinvented Big pharma companies announce layoffs, restructurings Stock buybacks Velcade gives NICE an unprecedented Safety concerns by three take bite sweeping out of money- trends: back guarantee product sales FDA NME approvals Product safety Creative deal fall to lowest level in incidents in the structures R over 25 years rising China market $ &????? more pricing pressures F F D π? I M&A emerging D R P A E The N Biotech companies mega A M E 8% retain more deal S T A is back rights in deals s Big pharma s search for pipeline productivity propels a booming deal environment Personalized Government negotiation medicine R&D productivity of drug prices under MMA returns to public policy debate Globalization Page 9

10 The problem: patent expirations Losses to reach US$67bn by 212 US$bn projected sales losses from patent expirations Source: Sanford C. Bernstein & Co. Page 1

11 Reinventing drug development Pharma will continue to need biotech to fill their pipelines Pharma s patent productivity challenges drive change Short- term: cost cutting, late- stage acquisitions Long- term: platform deals, restructuring R&D (smaller teams, networked, more autonomous) Page 11

12 Solution 1 Cutting costs Selected job reduction announcements by large drug companies Company Pfizer AstraZeneca Merck & Co. Bristol-Myers Squibb Johnson & Johnson Novartis GlaxoSmithKline Amgen Schering-Plough Job reductions announced 1, 7,6 7, 4,3 3,6-4,8 3,76 Not disclosed 2,2-2,6 1,1 Anticipated cost savings US$2 billion US$ 9 million US$2.3 billion US$1.5 billion US$ billion US$1.6 billion US$ 1.4 billion US$1-1.3 billion US$1 million Source: Ernst & Young and company announcements Page 12

13 Solution 2 Boosting EPS Propping up EPS: dividends and stock buybacks since 22 Cumulative dividends Dividends and buybacks (US$b) Stock buybacks Change in market cap Change in market cap (US$b) Pfizer GSK Novartis J&J Merck AZ Amgen BMS Wyeth Lilly SNY Genentech Roche Source: Ernst & Young and company financial statements. Page 13

14 Solution 2 Buying pipeline assets Selected big pharma acquisitions, Company AstraZeneca Merck KGaA Takeda Novartis Eisai Abbott UCB Merck GlaxoSmithKline Bristol Myers Squibb Pfizer GlaxoSmithKline Company MedImmune Serono Millennium Chiron MGI Pharma KOS Celltech Sirna Therapeutics Sirtris Adnexus Rinat Domantis Source: Ernst & Young, Windhover and company reports Platform / phase Commercial Commercial Commercial Commercial Commercial Commercial Platform + Phase III Platform + Phase II Platform + Phase II Platform + Phase I Phase II Platform - preclinical Value ($mio.) Page 14

15 M&A Developments & Trends Page 15

16 M&A in the US Record-breaking M&As, led by a mega deal US M&A history by value (US$bn) Pharma-biotech Biotech-biotech Pharma-biotech mega deals Biotech-biotech mega deals Source: Ernst & Young, BioWorld, Recombinant Capital and Windhover Page 16

17 M&A in the US Even adjusted for mega deals strong past three years US M&A history by value (US$bn) Pharma-biotech Biotech-biotech Source: Ernst & Young, BioWorld, Recombinant Capital and Windhover Page 17

18 M&A globally Values increased constantly in the past three years Global M&A value Value adjusted for mega deals Total in $bn Pharma-Bio Pharma-Bio average Average in $m Bio-Bio Bio-Bio average Total in $bn Average in $m Pharma-Bio Bio-Bio Pharma-Bio average Bio-Bio ave Source: Ernst & Young; global means US and Europe 25: 1 = 1,24$, 26: 1 = 1,25$, 27: 1 = 1,37$ Page 18

19 M&A Europe vs. US European M&A averages lower compared to the US European M&A value* US M&A value* Total in $m Average in $m Total in $m Average in $m Pharma-Bio Bio-Bio Pharma-Bio average Bio-Bio average Source: Ernst & Young *27 adjusted for mega deal 25: 1 = 1,24$, 26: 1 = 1,25$, 27: 1 = 1,37$ Page 19

20 27 & 28 M&A Top M&A s in Europe vs. US Company Target Value ( m) Value ($m) Company Acquired or merged company Value (US$m) Merck KGaA GER Serono CH AstraZeneca MedImmune 15.6 Shire Pharmac. Qiagen Actelion Vectura Solvay Ph. Daiichi Sankyo EUSA Ph. AstraZeneca Evotec Orexo Bioton UK NL CH UK B J US UK D SW PL New River Digene CoTherix Innovata Biomed Innogenetics U3 Pharma OPi Arrow Th. Renovis Biolipox Biopartners US US US UK B D F UK US SW CH Takeda Eisai Celgene Shire Pharmac. Inverness Med. Solutions GSK Ikaria MDS Roche Astellas Pharma BMS Cytyc Amgen Millennium MGI Pharma Pharmion New River Biosite Sirtris INO Therapeutics Molecular Devices Bioveris Agensys Adnexus Therapeut. Adeza Ilypsa Source: Ernst & Young Actelion CoTherix 42 Page 2

21 HBM Partners M&A Survey as strongest year US$bn trade sale transaction volumes (upfront consideration) 5 4 5, ,3 Hexal 2,6 31,1 4,4 1 15, Public companies Venture-backed companies Source: HBM Partners M&A Survey; previous buyouts and other private companies not shown Page 21

22 Venture backed M&As US leads regarding transaction volumes US$bn transaction volumes (upfront consideration) 6 5, ,5 1, ,1 1, US Europe Source: HBM Partners M&A Survey Page 22

23 Venture backed M&As Average multiple for investors at 2,7x, US leads as well US$bn investment / transaction volumes ,7x ,5x 7 3x x 1 2 1,5 All US Targets EU Targets "Winners" Total investment Total transaction volume # of transactions Source: HBM Partners M&A Survey; Winners are transactions with more than 3x multiple return for investors Page 23

24 Venture backed M&As Transactions with European targets created more loss % of transactions by return to investors by region US Europe Source: HBM Partners M&A Survey Loss 1x - 2x 2x - 3x > 3x Page 24

25 Venture backed M&As European targets at lower stage of development % of transactions by stage of lead product All US Targets EU Targets "Winners" Preclinical Phase I or II Phase III Source: HBM Partners M&A Survey; Winners are transactions with more than 3x multiple return for investors Page 25

26 Venture backed M&As US relative size of VC market higher than in Europe US$bn biotech venture capital 6 5, ,4 1,2 2,2 1 2,8 1 3,6 1,5 3,3 3,3 1,8 1,9 1, US Europe Source: Ernst & Young Page 26

27 Venture backed M&As Highest return at transaction involving Phase I&II companies % of return to investors by stage of lead product Median return multiples,6x 2,x 1,9x 1,5x Preclinical Phase I Phase II Phase III / Market Source: HBM Partners M&A Survey Loss 1x - 2x 2x - 3x > 3x Page 27

28 Venture backed M&As Product & platform produced the best returns for investors % of return to investors by products vs. platforms Number of transactions 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % Product Product & Platform Platform Source: HBM Partners M&A Survey Loss 1x - 2x 2x - 3x > 3x Page 28

29 Venture backed M&As Product & platform produced the best returns for investors % of return to investors by disease area x - 3x 9 18 > 3x Cancer CNS/Pain Source: HBM Partners M&A Survey Metabolic Antiinf./Vaccines Autoimmune/Inflamm. Cardiovascular Page 29

30 Venture backed M&As Who were the buyers? Large pharma pays most By number of transactions By transaction volume (US$bn) Specialty Pharma; 9; 13% Large Pharma; 24; 36% Specialty Pharma; 1,3; 12% Small Biotech; 25; 38% Large Pharma; 7; 64% Small Biotech; 25; 38% Large Biotech; 9; 13% Large Biotech; 2; 19% Source: HBM Partners M&A Survey Page 3

31 Venture backed M&As 5% of transactions produced attractive or good returns Number / percentage of transactions (only with return estimates) <1x (loss); 17; 31% > 3x; 17; 31% ~ 1x; 3; 5% 1x to 2x; 6; 11% 2x to 3x ; 12; 22% Source: HBM Partners M&A Survey Page 31

32 Alliances Developments & Trends Page 32

33 Alliances = Solution 3? Alliances gain more importance than M&As European alliances value Total in m / bn European M&A values Total in m / bn , , , Bio-Bio 4, 1,5 1,3 2,2 Bio-Pharma 3. Source: Ernst & Young (Alliances and M&A value where deal terms are publicly disclosed) 2,1 1,3,8 4, Bio-Pharma mega deals Bio-Pharma Bio-Bio Page 33

34 Alliances Same is true for the US US alliances value Total in $m / $bn US M&A values Total in $m / $bn , , Bio-Bio 21,6 5, 4, Bio-Pharma 2, Source: Ernst & Young (Alliances and M&A value where deal terms are publicly disclosed) 6,2 9,1 6,1 12,2 7,5 5,7 1, Bio-Pharma mega deals Bio-Pharma Bio-Bio Page 34

35 Alliances 27 brought similar average values compared to the US European alliances value US alliances value Total in $m Average in $m Total in $m Average in $m Bio-Pharma Bio-Bio Bio-Pharma average Bio-Bio average Source: Ernst & Young 25: 1 = 1,24$, 26: 1 = 1,25$, 27: 1 = 1,37$ Page 35

36 Alliances 27 & 28 selected top alliances in Europe vs. US Company Ablynx Galapagos Genomics Antisoma Renovo Oxford BioMedica Santaris Intercell MorphoSys Argenta Discovery Cytos Biotechn. Shire Silence Th. Neurimmune Cou ntry B B UK UK UK DK A GER UK CH UK UK CH Partner B. Ingelheim Janssen Pharmac. Novartis Shire Sanofi Aventis GSK Novartis Novartis AstraZeneca Novartis Amicus Th. AstraZeneca Biogen Idec Coun try GER NL/ US CH UK F UK CH CH UK CH US UK US Value ( m) Value (US$m) Company Targacept OncoMed Pharmac. Anacor Pharmac. Adnexus Therap. ARIAD Pharmac. Isis Pharmac. Regeneron Synta Pharmac. Alnylam Pharmac. Alnylam Pharmac. Celgene Genentech TolerRx Amgen Xenoport Anacor Pharmac. Partner GSK GSK GSK BMS Merck & Co. Genzyme Sanofi-Aventis GSK Takeda Roche Array Bioph. Seattle Genetics GSK Cytokinetics GSK Schering-Plough Value (US$m) Page 36

37 Alliances Alliances exceed equity financing as source for capital Capital raised by European companies, 25 to 27 Total in m Average in m UK B DK CH GER A F SW IT Alliances Equity Alliances average Source: Ernst & Young (Alliances value is potential value, including upfront and milestone payments, for alliances where deal terms are publicly disclosed) Page 37

38 Equity financing European financing is steadily growing European yearly biotech financings b 7 6,7 6 5,5 5 4,6 1, , 2,2 1,2 2,3 2,9 3,5 1,5,7 2,2,7 3, Follow-on and other offerings IPO Venture financing Source: Ernst & Young, BioCentury, BioWorld, and VentureSource Page 38

39 Equity financing summary Europe Europe with stronger growth, but totals are 3-5 times less European equity financing ($bn) US equity financing ($bn) ,6 1, ,5 1, ,8 8 14, Follow-on and other IPO Venture financing Source: Ernst & Young, BioCentury, BioWorld, and VentureSource Page 39

40 Outlook Page 4

41 The business of drug development will fundamentally change Approaches to research and development Business models The value chain Deal structures Balance of power between biotech and big pharma Partnerships between western companies and companies in emerging markets Page 41

42 Opportunities for companies Biotech Pharma More flexibility Minimize P&L impact of investments Biotechs gaining more bargaining power Greater rights retention Creative deals Accept more risk to increase potential upside Pharma s imperative to fix R&D productivity Greater share of value produced Acquire culture, not just pipeline Source: Ernst & Young Page 42

43 Models of the future Biotech Pharma 1 Pharma 2 Leaner FIPCOs: less infrastructure required Value-chain specialization Becoming FIPCOs less imperative with higher royalties, copromotion rights Some successfully reinvent R&D New Models: More risk accepting in R&D Leaner sales More networked For those that don t succeed at reinvention: Core strengths are lower-margin Competition from emerging markets De facto CROs or CMOs? Source: Ernst & Young Page 43

44 Thank you