Biotech Investing

2015 has been an exciting year for the biotech and pharmaceutical industries, with major M&A activity transforming the investing landscape. AbbeVie, Actavis and Pfizer made the top deals of 2015’s first quarter.

2015 has been an exciting year for the biotech and pharmaceutical industries, with major mergers and acquisitions transforming the investing landscape.
Here, the Investing News Network profiles the three largest deals of the first quarter of 2015, outlining how investors are responding to these major shifts.

AbbVie makes $21-billion move on Pharmacyclics

Pharmaceutical giant AbbVie (NYSE:ABBV) announced that it will acquire Pharmacyclics (NYSE:PCYC) for $21 billion. Pharmacyclics’ main asset is Imbruvica, a treatement for hematologic malignancies. According to AbbVie’s press release, “the acquisition accelerates AbbVie’s clinical and commercial presence in oncology, strengthening its already robust pipeline, and establishing its strong leadership position in hematological oncology — an attractive and rapidly growing market, now approaching $24 billion globally.”
Reuters reported at the time that AbbVie paid $261.25 per share in cash and stock, a 13-percent premium on Pharmacyclics’ share price at market close on March 4, when the deal was announced. Following the deal’s announcement, Pharmacyclics’ share price shot up by 10 percent. However, Forbes said that AbbVie’s share price took a dip, prompting analysts to worry whether or not the big pharmaceutical company had overpaid for its acquisition.

Actavis announces $21-billion public offering

On March 3, Actavis announced the pricing of a $21-billion public offering of senior notes in connection with its pending merger with Allergan (NYSE:ACT). Actavis representative Cleary Gottlieb said that in addition to being the largest bond offering of the year, it was the second-biggest corporate debt issuance in history.
According to Actavis’ press release, it was to use the proceeds of the offering, in addition to other resources, to finance some of the cash portion of its merger with Allergan.

Pfizer reports $17-billion Hospira buy

On February 5, Pfizer (NYSE:PFE) announced that it had entered into a definitive merger agreement to acquire Hospira (NYSE:HSP). The transaction is valued at $90 per Hospira share, meaning that the deal comes out to approximately $17 billion.
Pfizer Chairiman and CEO Ian Read said in a press release, “[t]he proposed acquisition of Hospira demonstrates our commitment to prudently deploy capital to create shareholder value and deliver incremental revenue and EPS growth in the near-term. In addition, Hospira’s business aligns well with our new commercial structure and is an excellent strategic fit for our Global Established Pharmaceutical business, which will benefit from a significantly enhanced product portfolio in growing markets.”
Investors reacted positively to the deal, with Forbes reporting a 3-percent increase in Pfizer’s share price in early morning trading. The jump was attributed to investors’ hope that Pfizer will ultimately break itself into two separate companies to increase shareholder value. At the time of the acquisition, there was also speculation as to whether or not Pfizer might do an even larger deal with Actavis, though as time went by that proved not to be the case.

Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.

Related reading:

What is Pharmaceutical Investing?

2014 Top News Stories in Big Pharma

2015 Top Trends in Pharmaceutical Investing

5 Largest Pharmaceutical Companies by Market Cap

Best International Regions for Pharmaceutical Companies


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