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Update: Pharmaceutical Mergers and Acquisitions

The Top 10 Largest Pharmaceutical Mergers in History

| Author: Matthias Back

Our article shows the biggest deals in the history of the pharmaceutical industry.
Our article shows the biggest deals in the history of the pharmaceutical industry. (Bild: gemeinfrei / CC0)

The pharmaceutical industry is under pressure. The sales and profits of the pharmaceutical giants have been declining for years. As a way out of this misery, takeovers and mergers seem to be a tried and tested means. PharmaTEC and PROCESS summarise the largest deals in the history of the industry for you.

Wuerzburg – Falling product prices, expiring patents, cost pressure and a stagnating demand in traditional markets as well as increasing competition from cheap imitation products are the main reasons for the continuing weakness in sales and profits of the large pharmaceutical groups. In 2013 alone, the sales of the world's ten largest pharmaceutical groups fell by 2.1% to just under 268 billion dollars. The result is an ever-increasing concentration process within the industry. The list of the ten largest pharmaceutical deals includes both successful and ultimately unsuccessful takeovers.

10th place – Medtronic/Covidien – 34.6 Billion Dollar (acquisition completed in 2014)

The takeover of the Irish medical technology manufacturer Covidien by its US competitor Medtronic was just recently placed in the Top 10.

9th place - Roche/Genentech - 41.3 Billion Dollar (acquisition completed in 2009)

The largest takeover in the history of a Swiss company is done by Roche. In 2009, following tough negotiations over a time period of eight months, the pharmaceutical group acquired the US biotechnology company Genentech.

8th place - Pfizer/Wyeth - 58.1 Billion Dollar (2009/completed)

The US pharmaceutical company Pfizer has bought its US rival Wyeth for 52 billion euros. At the time of the purchase, both companies were among the ten largest pharmaceutical companies in the world. However, the takeover has also caused negative headlines, as media reports suggest that between 13,000 and 20,000 jobs will be lost. Pfizer lost its leading position as the world's largest pharmaceutical company to the Swiss pharmaceutical group Novartis in 2012.

7th place - Actavis/Allergan - 59.2 Billion Dollar (takeover completed in 2014)

The Irish based pharmaceutical company Actavis won the takeover battle for the Botox manufacturer Allergan at the end of 2014. Previously, the Canadian competitor Valeant had promoted a hostile takeover with the help of New York hedge fund manager Bill Ackman. However, according to CEO Michael Pearson, the price of 195 dollar per share could not be justified to the company's own shareholders and Valeant withdrew.

6th place - Takeda Pharmaceutical/Shire - 60.3 Billion Dollar (acquisition completed in 2018)

Last year, Takeda Pharmaceuticals acquired the Irish pharmaceutical manufacturer Shire for 60.3 billion dollar, making it the largest takeover of a Japanese company abroad. In order to close the deal, Takeda had to improve its offer four times. The acquisition is expected to be completed in the first half of 2019.

5th place - Pfizer/Pharmacia - 68.1 Billion Dollar (acquisition completed in 2002)

With three successful acquisitions, the US pharmaceutical giant Pfizer is by far the most active company in this ranking. In 2002, Pfizer took over its Swedish competitor Pharmacia. The purchase price was 68,1 billion dollar in shares. After the purchase, Pfizer owned twelve drugs with an annual turnover of more than one billion dollars each at the time.

4th place - Bristol-Myers Squibb/Celgene - 72.6 Billion Dollar (acquisition still open in 2019)

'The best of pharmaceuticals combined with the best of biotech', was how the two company directors Giovanni Caforio (Bristol-Myers Squibb) and Mark Alles (Celgene) presented the transaction at a conference call. The background to the acquisition is Bristol-Myers Squibb's objectives in the booming cancer drug market. Final closing is expected in the third quarter of 2019. With an estimated sales volume of 22.3 billion dollar, the Americans will be number two in oncology after Roche.

3rd place - Sanofi/Aventis - 73.2 Billion Dollar (takeover completed in 2004)

The French pharmaceutical group Sanofi was formed in 2004 from a merger between equals of Sanofi-Synthélabo and Aventis. Both companies were already created from a merger. In 1999, Sanofi and Synthélabo each became Sanofi-Synthélabo and Hoechst and Rhône-Poulenc became Aventis. Before the merger, Sanofi-Synthélabo tried to convince the Aventis shareholders with a hostile takeover bid. However, the bid was rejected as insufficient. After massive interventions by the French government and an improved offer by Sanofi-Synthélabo, as well as the renunciation of redundancies and site closures on the German side, Aventis accepted the offer. Until 2011, Sanofi operated under the name Sanofi-Aventis.

2nd place - Glaxo Wellcome/Smith Kline Beecham - 89.3 Billion Dollar (merger completed in 2000)

At the turn of the millennium, the two British pharmaceutical groups Glaxo Wellcome and Smith Kline Beecham merged to form Glaxo Smith Kline for a total of almost 90 billion dollar. The merger was preceded by a detailed eleven-month review of the competition authorities. The first merger attempt two years earlier had failed.

1st place - Pfizer/Warner-Lambert - 106.1 Billion Dollar (takeover completed in 2000)

The largest takeover in pharmaceutical history to date was also made by the US company Pfizer. The New York-based pharmaceutical giant spent 106.1 billion dollar on the takeover of its US competitor Warner-Lambert. Pfizer thus preceded the takeover of Warner-Lambert by the US pharmaceutical company American Home Products (later renamed Wyeth) at the last second. Negotiations between the two companies were in their final stages and an agreement had already been reached on a purchase price of 84.9 billion dollar. Pfizer then decided to make a 106.1 billion euro offer for Warner-Lambert, which was finally approved by the board. Pfizer and Warner Lambert had already been cooperating in a joint venture since 1996. However, Pfizer saw the friendly takeover bid from American Home Products to Warner Lambert as a threat to this cooperation and reacted with a hostile takeover bid. American Home Products received the record sum of 2.1 billion dollar as compensation for the bursting of the already agreed merger. At the time, the Pfizer/Warner-Lambert deal was the fourth largest takeover in history. Only Vodafone/Mannesmann, AOL/Time-Warner and MCI Worldcom/Sprint cost more money. According to a publication by management consultants Ernst & Young, Pfizer is the largest pharmaceutical company in the world in terms of pure pharmaceutical sales, followed by Roche and Merck.

Two of the three largest failed takeovers are due to the US pharmaceutical company Pfizer.

3rd place - Wyeth/Warner-Lambert - 84.9 Billion Dollar (1999/failed)

In third place among the biggest failed pharmaceutical mergers is the hostile takeover attempt of Warner-Lambert by the Americans of American Home Products. The deal, which for a long time was regarded as secure, failed on the final straight due to a higher offer from Pfizer. American Home Products at least somewhat sweetened the defeat with a fine of 2.1 billion dollar. American Home Products later changed its name to Wyeth and was also acquired by Pfizer in 2009.

2nd place - Pfizer/Astra Zeneca - 105 Billion Dollar (takeover attempt failed in 2014)

In early 2014, Pfizer caused a sensation with a record bid for its British/Swedish competitor Astra Zeneca. The Americans wanted to buy the company for 105 billion dollar. Astra Zeneca rejected this offer as well as two earlier offers worth 85 and 91 billion euros respectively. A hostile takeover was out of the question for Pfizer. Astra Zeneca justified the rejection with what it considered to be too low a purchase price and fear of job losses in the United Kingdom.

1st place - Pfizer/Allergan - 156.3 Billion Dollar (takeover attempt failed in 2016)

At the end of 2015, the two pharmaceutical heavyweights Pfizer and Allergan announced their intention to merge. It would be the biggest deal in the history of the pharmaceutical industry. The smaller Irish company Allergan should have taken over the Americans from Pfizer and, even if only temporarily, should have traded under Pfizer's name. The background was, as so often happens, tax considerations. With its headquarters in Dublin, the new company would have been able to avoid the higher US taxes. The measures against tax evasion announced by the US government around President Barack Obama in April 2016, however, destroyed the plan. In the end, Pfizer had to pay an additional penalty of 128 million dollar for the deal.

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