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As Buyout Fever Grows, Alexion, Amarion and BioMarin Are Potential Targets

All signs point to biopharmaceutical companies continuing their aggressive pursuit of acquisitions to help meet growth targets.

FiercePharma reported in a recent article that, according to KMPG'S annual Global CEO Outlook survey, more than 40% of industry CEOs have a "high appetite for M&A, up from 33% a year ago." This news comes on the heels of a robust first half of activity, when deals totaled nearly $185 billion.


That dollar figure may be a bit misleading inasmuch as a pair of huge acquisitions accounted for two-thirds of the total. They were Bristol-Myers Squibb's (NYSE:BMY) $74 billion buyout of Celgene and AbbVie's (NYSE:ABBV) $63 billion acquisition of Allergan.

"Life sciences CEOs realize that it makes sense to find partners with capabilities in research to help bring products to market, whether that is through working with startups or venture partners or looking at technological solutions," Carole Streicher, KPMG's deal advisory leader for health care and life sciences, said in a statement.

Among the link-ups CEOs would consider are licensing arrangements, partnerships or outright buyouts. Factors helping drive deals include low interest rates and favorable stock valuations.

But when all CEOs, including those outside the U.S., were canvassed, 44% said the paramount reasons they want to do deals are to alter their business models and boost market share.

Among the recent marriages consummated with those criteria in mind were GlaxoSmithKline's (NYSE:GSK) $5.1 billion purchase of Tesaro. Glaxo was able to pick the company up at a reasonable price because Tesaro's drug Zejula was underperforming. The deal adds a promising entry to Glaxo's cancer pipeline.

Other deals cited were Takeda's (NYSE:TAK) purchase of Shire, Pfizer's (NYSE:PFE) deal with Mylan (NASDAQ:MYL), Eli Lilly's (NYSE:LLY) purchase of Loxo Oncology and Amgen's (NASDAQ:AMGN) acquisition of Celgene.

What are some of the other biotechs that could change ownership?

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Among those cited in a Sept. 10 article in Biospace is Alexion Pharmaceuticals (NASDAQ:ALXN), whose Soliris is a highly profitable drug that continues to gain approvals for rare diseases. Amgen was thought to be interested in Alexion, but its desire has been cooled by the Bristol-Amgen deal on Otezla, which is used to treat psoriasis, psoriatic arthritis and Behcet's disease.

Another potential target is Amarin (NASDAQ:AMRN), the Dublin, Ireland-based company that hopes to get Food and Drug Administration approval for its medication Vascepa to treat cardiovascular risk beyond cholesterol management. If the treatment gets green-lighted, Amarin will be even more attractive.

Also on the radar is BioMarin Pharmaceutical (NASDAQ:BMRN), whose focus is rare diseases. It already has seven drugs on the market. The company has been on the target list for years now, but interest is likely to be accelerated if it can get U.S. and European approval for its gene therapy to treat hemophilia.

Investors may want to keep tabs on others thought to be in the crosshairs:

  • Bluebird bio (BLUE)
  • Clovis Oncology (CLVS)
  • Incyte (INCY)



Disclosure: The author holds positions in Amgen, Eli Lilly and Bristol-Myers Squibb.

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This article first appeared on GuruFocus.