There has been more M&A activity in the biotechnology, pharmaceuticals, and health care sectors during 2008-2009, but slightly less in 2010. However, the big M&A deal to watch in 2011 will be the outcome of Sanofi-Aventis [SNY] and Genzyme [GENZ]. Most large companies in the industry have already completed many multi-million and multi-billion dollar deals within the last 2 years alone. This includes names such as Merck, Wyeth, Schering-Plough, Sanofi-Aventis, AstraZeneca, Johnson&Johnson, Bristol-Myers Squibb, GlaxoSmithKline, etc. These acquisitions ranged from small, mid, to large sized companies in a wide range of industries including consumer, health, generics, animal health, vaccines, diabetes, cancer, etc. Many joint ventures have also been completed as well. Despite the busy M&A activity in recent years, it can be expected that further consolidation and joint ventures continue at a fairly moderate pace in 2011 and beyond. Many large companies have hoards of cash, and will likely spend it on small to mid-size deals/companies. The Sanofi-Aventis and Genzyme deal may be the largest deal of the year in the industry. Potential takeover targets include smaller highly specialized niche players, with good research pipelines, but also lack financial muscle or production expertise. Specialized niche areas include vaccines (highly sought after in recent years), cancer, diabetes, gene therapy, rare/infectious diseases, etc. We can also expect smaller generic manufacturers to be takeover targets as the larger companies try to diversify, seek downside protection from expiring drug patents, and limit the negative financial impact of other larger generics.
