Patent Expirations Creating Opportunities for Biotech M&A

Large pharmaceutical companies with expired patents are looking for products to supplement their research and development efforts.  Hot areas appear to be in oncology names and autoimmune areas.  Although large pharmaceutical companies are facing one of the worst dilemmas with respect to patent expirations, they also have access to cash, which creates great opportunity for promising biotech companies.  Volume of mergers and acquisitions in biotechnology has reached $25 billion.  This number has been highest since 2008 when deal volumes surged to $54 billion because of Roche’s takeover of Genentech.

There has been an increased interest in taking over for hepatitis C companies such as Inhibitex.  There was an $11 billion sale to Gilead Sciences Inc.  Inhibitex and Gilead both drew several other bidders in the auction process, which highlights the interest in this area with buyers willing to pay hefty premiums for assets.  Big pharmaceutical companies prefer commercial-stage assets, rather than clinical trial-stage drugs, which carry regulatory approval risk.   This means that companies tend to pursue multi-billion dollar transaction rather than smaller deals.

So what does all this mean? If your company has great patents and falls within the hot areas, it may be wise to discuss merger deals with pharmaceutical companies with money and looking to bid.

Article by Dorisa Shahmirzai, Esq.

Founder and Tech Transaction/IP Attorney at IP Law Click


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