Biotech deal premiums still punchy
Lofty asset prices mean that determined buyers will need to dig deep to seal deals in 2021. Still, an analysis of historic M&A premiums suggests that this might not be too surprising: average premiums remained close to 100% in 2020, after breaching that number in 2019, the latest EvaluatePharma data show. The last couple of years have been remarkable because even large takeovers have been struck at very keen terms – it tends to be the smaller transactions that attract triple-figure premiums, which explains why the average is so high in 2016, a quiet M&A year in which only a handful of small deals happened. In 2020 three R&D-stage and three commercial-stage drug developers were bought in triple-figure premium deals. Those struck by Gilead stand out among the most sizeable: the big US biotech paid $4.9bn for Forty Seven and $21bn for Immunomedics, at premiums of 110% and 111% respectively. And, while the data seem to suggest that commercial-stage developers see less fluctuation on this metric, it is notable that three of the biggest premiums paid over this period occurred in 2020. Perhaps buyers should be braced for more price inflation this year.
Note: Premiums calculated from average share price over 30 days before deal announcement. Only includes acquisitions of pure-play drug developers; medtech, diagnostics, digital health etc excluded.