Big Pharma M&A Analysis to 2012 - Surveying the growth rate landscape

With sales growth rates expected to fall below their historic levels, Big Pharma must act to bolster its performance out to 2012 if it is to maintain the investment community's valuation of its stocks. One mechanism for plugging the sales growth rate gap and fulfilling investors' 'growth imperative' is M&A activity.

Report Highlights
Big Pharma is facing a 'growth gap' between its historical sales performance and its 200712 outlook. If it is to maintain its historic level of valuation in the eyes of the investment community, this must be filled. M&A stands out as a possible mechanism for achieving this.

However, the shear scale of gap means there are limited opportunities available for companies to do this. Indeed, the companies with the bleakest outlook have only a small selection of targets that will lift them to a positive sales growth rate throughout the forecast window.

Despite this, there is a definite grouping of four companies (Gilead, Genzyme, Biogen Idec and Cephalon) that offer universal uplift benefits to potential Big Pharma suitors. Moreover, these companies have companies strategic profiles suggest they could bring further benefits beyond growth.
[Studien Infos ausblenden]

Table 1: Which is your biggest customer group for private equity/ venture capital investments today? 18
Table 2: What do you think will be the major barrier to wider take-up of private equity/venture capital investments by institutional investors over the next year? 20
Table 3: To what extent do you agree that there is likely to be a significant economic downturn in Europe in 2008? 22
Table 4: To what extent do you agree that investors will be more cautious about investing over the next 2 years because of current conditions and their memory of the 2000-2003 downturn? 22
Table 5: To what extent do you agree that media coverage of current economic conditions is pushing customers into capital protected products? 23
Table 6: To what extent do you agree that media coverage of current economic conditions is reducing demand for private equity investments? 23
Table 7: What do you think will be the major barrier to wider take up of private equity funds by high net worth investors over the next year? 26
Table 8: What do you think will be the major barrier to wider take-up of private equity/venture capital funds by mass market investors over the next year? 31
Table 9: Which will be your biggest customer group for private equity/ venture capital investments in three years time compared with which is your biggest customer group now? 33
Table 10: To what extent do you agree that media coverage of current economic conditions is pushing customers into capital protected products? 35
Table 11: What type of organization do you work for? Q4 2007 37
Table 12: What is the average case size of business you deal with? 38
Table 13: In your opinion, what is the most important reason why mass market investors are demanding private equity and venture capital funds today? 42
Table 14: What do you think is the best way for private equity funds to be distributed to mass market investors? 44
Table 15: What is the most important reason why high net worth investors are demanding private equity and venture capital funds today? 47
Table 16: Facing the possibility of a global economic slowdown, which of the following strategies will be most effective in sustaining demand for alternative investments among your high net worth clients or the wealth managers who advise them? 49
Table 17: What do you think is the best way for private equity to be distributed to high net worth investors? 52
Table 18: What is the most important reasons why institutional clients are demanding private equity investments today? 54
Table 19: Facing the possibility of economic slowdown, which of the following strategies will be most effective in sustaining institutional demand for private equity investments among your clients or the wealth managers who advise them? 56
Table 20: What do you think is the best way for the private equity funds to be distributed to institutional investors? 58
Figure 1: Primary goal for company performance - profit growth 3
Figure 2: Sales growth 'gap' for the representative $10 billion Big Pharma company, 2007-12 4
Figure 3: Big Pharma peer set - company-by-company 2007-12 Rx sales growth rates (%) 6
Figure 4: Big Pharma M&A permutation analysis methodology 8
Figure 5: 47 optimal permutations - 2007-12 Rx sales growth rate uplift (ppt) vs. cost per percentage point ($bn) 10
Figure 6: Average 2007-12 Rx sales growth rate uplift (ppt) offered by each potential target company 16
Figure 7: Sales ($m) and growth rate (%) for a representative $10 billion Big Pharma company, 2001-12 23
Figure 8: Launch, core and expiry profile for a representative $10 billion Big Pharma company, 2007-12 24
Figure 9: Sales growth 'gap' for the representative $10 billion Big Pharma company, 2007-12 25
Figure 10: Size and total growth rate required of target companies to restore a $10 billion acquirer to historic 7.3% CAGR 28
Figure 11: The 'bubbles of water' M&A analogy 29
Figure 12: PharmaVitae universe - companies by Rx sales, 2007 34
Figure 13: PharmaVitae universe -Rx sales difference ($m) by company, 2007-12 36
Figure 14: PharmaVitae universe - Rx sales growth (%) by company, 2007-12 37
Figure 15: PharmaVitae universe - 2007 Rx sales vs. growth (%), 2007-12 38
Figure 16: PharmaVitae universe - market capitalizations ($m) by company 40
Figure 17: PharmaVitae universe - Rx focus (%) by company, 2007 41
Figure 18: PharmaVitae universe - market capitalizations ($m) adjusted according to Rx focus 42
Figure 19: PharmaVitae universe - Rx-adjusted market capitalizations vs. Rx sales ($bn), 2007 43
Figure 20: Big Pharma M&A permutation analysis methodology 45
Figure 21: Pfizer - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 47
Figure 22: Pfizer - Target companies' cost per ppt uplift ($bn) 48
Figure 23: Pfizer - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 49
Figure 24: Pfizer & Sanofi-Aventis - Blockbuster divestment risk analysis 51
Figure 25: Pfizer & Sanofi-Aventis - Portfolio synergy analysis 52
Figure 26: Pfizer & Merck & Co. - Blockbuster divestment risk analysis 53
Figure 27: Pfizer & Merck & Co. - Post-divestment analysis 54
Figure 28: Pfizer & Merck & Co. - Portfolio synergy analysis 55
Figure 29: Pfizer & Eli Lilly - Blockbuster divestment risk analysis 56
Figure 30: Pfizer & Eli Lilly - Post-divestment analysis 57
Figure 31: Pfizer & Eli Lilly - Portfolio synergy analysis 58
Figure 32: Pfizer & Gilead - Blockbuster divestment risk analysis 59
Figure 33: Pfizer & Gilead - Portfolio synergy analysis 60
Figure 34: Pfizer & Schering-Plough - Blockbuster divestment risk analysis 61
Figure 35: Pfizer & Schering-Plough - Post-divestment analysis 62
Figure 36: Pfizer & Schering-Plough - Portfolio synergy analysis 63
Figure 37: Pfizer & Genzyme - Blockbuster divestment risk analysis 64
Figure 38: Pfizer & Genzyme - Portfolio synergy analysis 65
Figure 39: GlaxoSmithKline - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 67
Figure 40: GlaxoSmithKline - Target companies' cost per ppt uplift ($bn) 68
Figure 41: GlaxoSmithKline - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 69
Figure 42: GlaxoSmithKline & Sanofi-Aventis - Blockbuster divestment risk analysis 70
Figure 43: GlaxoSmithKline & Sanofi-Aventis - Post-divestment analysis 71
Figure 44: GlaxoSmithKline & Sanofi-Aventis - Portfolio synergy analysis 72
Figure 45: GlaxoSmithKline & Merck & Co. - Blockbuster divestment risk analysis 73
Figure 46: GlaxoSmithKline & Merck & Co. - Post-divestment analysis 74
Figure 47: GlaxoSmithKline & Merck & Co. - Portfolio synergy analysis 75
Figure 48: GlaxoSmithKline & Eli Lilly - Blockbuster divestment risk analysis 76
Figure 49: GlaxoSmithKline & Eli Lilly - Post-divestment analysis 77
Figure 50: GlaxoSmithKline & Eli Lilly - Portfolio synergy analysis 78
Figure 51: GlaxoSmithKline & Gilead - Blockbuster divestment risk analysis 79
Figure 52: GlaxoSmithKline & Gilead - Portfolio synergy analysis 80
Figure 53: GlaxoSmithKline & Schering-Plough - Blockbuster divestment risk analysis 81
Figure 54: GlaxoSmithKline & Schering-Plough - Post-divestment analysis 82
Figure 55: GlaxoSmithKline & Schering-Plough - Portfolio synergy analysis 83
Figure 56: GlaxoSmithKline & Genzyme - Blockbuster divestment risk analysis 84
Figure 57: GlaxoSmithKline & Genzyme - Portfolio synergy analysis 85
Figure 58: Sanofi-Aventis - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 87
Figure 59: Sanofi-Aventis - Target companies' cost per ppt uplift ($bn) 88
Figure 60: Sanofi-Aventis - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 89
Figure 61: Sanofi-Aventis & Gilead - Blockbuster divestment risk analysis 90
Figure 62: Sanofi-Aventis & Gilead - Portfolio synergy analysis 91
Figure 63: Sanofi-Aventis & Genzyme - Blockbuster divestment risk analysis 92
Figure 64: Sanofi-Aventis & Genzyme - Portfolio synergy analysis 93
Figure 65: Roche - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 95
Figure 66: Roche - Target companies' cost per ppt uplift ($bn) 96
Figure 67: Roche - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 97
Figure 68: AstraZeneca - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 98
Figure 69: AstraZeneca - Target companies' cost per ppt uplift ($bn) 99
Figure 70: AstraZeneca - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 100
Figure 71: AstraZeneca & Gilead - Blockbuster divestment risk analysis 101
Figure 72: AstraZeneca & Gilead - Portfolio synergy analysis 102
Figure 73: AstraZeneca & Genzyme - Blockbuster divestment risk analysis 103
Figure 74: AstraZeneca & Genzyme - Portfolio synergy analysis 104
Figure 75: AstraZeneca & Biogen Idec - Blockbuster divestment risk analysis 105
Figure 76: AstraZeneca & Biogen Idec - Portfolio synergy analysis 106
Figure 77: AstraZeneca & Schering-Plough - Blockbuster divestment risk analysis 107
Figure 78: AstraZeneca & Schering-Plough - Post-divestment analysis 108
Figure 79: AstraZeneca & Schering-Plough - Portfolio synergy analysis 109
Figure 80: Johnson & Johnson - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 111
Figure 81: Johnson & Johnson - Target companies' cost per ppt uplift ($bn) 112
Figure 82: Johnson & Johnson - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 113
Figure 83: Johnson & Johnson & Gilead - Blockbuster divestment risk analysis 114
Figure 84: Johnson & Johnson & Gilead - Portfolio synergy analysis 115
Figure 85: Johnson & Johnson & Merck & Co. - Blockbuster divestment risk analysis 116
Figure 86: Johnson & Johnson & Merck & Co. - Post-divestment analysis 117
Figure 87: Johnson & Johnson & Merck & Co. - Portfolio synergy analysis 118
Figure 88: Johnson & Johnson & Genzyme - Blockbuster divestment risk analysis 119
Figure 89: Johnson & Johnson & Genzyme - Portfolio synergy analysis 120
Figure 90: Johnson & Johnson & Eli Lilly - Blockbuster divestment risk analysis 121
Figure 91: Johnson & Johnson & Eli Lilly - Post-divestment analysis 122
Figure 92: Johnson & Johnson & Eli Lilly - Portfolio synergy analysis 123
Figure 93: Merck & Co. - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 125
Figure 94: Merck & Co. - Target companies' cost per ppt uplift ($bn) 126
Figure 95: Merck & Co. - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 127
Figure 96: Merck & Co. & Gilead - Blockbuster divestment risk analysis 128
Figure 97: Merck & Co. & Gilead - Portfolio synergy analysis 129
Figure 98: Merck & Co. & Genzyme - Blockbuster divestment risk analysis 130
Figure 99: Merck & Co. & Genzyme - Portfolio synergy analysis 131
Figure 100: Merck & Co. & Biogen Idec - Blockbuster divestment risk analysis 132
Figure 101: Merck & Co. & Biogen Idec - Portfolio synergy analysis 133
Figure 102: Novartis - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 135
Figure 103: Novartis - Target companies' cost per ppt uplift ($bn) 136
Figure 104: Novartis - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 137
Figure 105: Novartis & Gilead - Blockbuster divestment risk analysis 138
Figure 106: Novartis & Gilead - Portfolio synergy analysis 139
Figure 107: Novartis & Genzyme - Blockbuster divestment risk analysis 140
Figure 108: Novartis & Genzyme - Portfolio synergy analysis 141
Figure 109: Novartis & Biogen Idec - Blockbuster divestment risk analysis 142
Figure 110: Novartis & Biogen Idec - Portfolio synergy analysis 143
Figure 111: Novartis & Cephalon - Blockbuster divestment risk analysis 144
Figure 112: Novartis & Cephalon - Portfolio synergy analysis 145
Figure 113: Eli Lilly - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 147
Figure 114: Eli Lilly - Target companies' cost per ppt uplift ($bn) 148
Figure 115: Eli Lilly - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 149
Figure 116: Eli Lilly & Gilead - Blockbuster divestment risk analysis 150
Figure 117: Eli Lilly & Gilead - Portfolio synergy analysis 151
Figure 118: Eli Lilly & Genzyme - Blockbuster divestment risk analysis 152
Figure 119: Eli Lilly & Genzyme - Portfolio synergy analysis 153
Figure 120: Eli Lilly & Biogen Idec - Blockbuster divestment risk analysis 154
Figure 121: Eli Lilly & Biogen Idec - Portfolio synergy analysis 155
Figure 122: Eli Lilly & Cephalon - Blockbuster divestment risk analysis 156
Figure 123: Eli Lilly & Cephalon - Portfolio synergy analysis 157
Figure 124: Wyeth - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 159
Figure 125: Wyeth - Target companies' cost per ppt uplift ($bn) 160
Figure 126: Wyeth - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 161
Figure 127: Wyeth & Gilead - Blockbuster divestment risk analysis 162
Figure 128: Wyeth & Gilead - Portfolio synergy analysis 163
Figure 129: Wyeth & Genzyme - Blockbuster divestment risk analysis 164
Figure 130: Wyeth & Genzyme - Portfolio synergy analysis 165
Figure 131: Wyeth & Biogen Idec - Blockbuster divestment risk analysis 166
Figure 132: Wyeth & Biogen Idec - Portfolio synergy analysis 167
Figure 133: Abbott Laboratories - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 169
Figure 134: Abbott Laboratories - Target companies' cost per ppt uplift ($bn) 170
Figure 135: Abbott Laboratories - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 171
Figure 136: Abbott & Gilead - Blockbuster divestment risk analysis 172
Figure 137: Abbott & Gilead - Post-divestment analysis 173
Figure 138: Abbott & Gilead - Portfolio synergy analysis 174
Figure 139: Abbott & Genzyme - Blockbuster divestment risk analysis 175
Figure 140: Abbott & Genzyme - Portfolio synergy analysis 176
Figure 141: Abbott & Biogen Idec - Blockbuster divestment risk analysis 177
Figure 142: Abbott & Biogen Idec - Portfolio synergy analysis 178
Figure 143: Abbott & Cephalon - Blockbuster divestment risk analysis 179
Figure 144: Abbott & Cephalon - Portfolio synergy analysis 180
Figure 145: Bristol-Myers Squibb - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 182
Figure 146: Bristol-Myers Squibb - Target companies' cost per ppt uplift ($bn) 183
Figure 147: Bristol-Myers Squibb - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 184
Figure 148: Bristol-Myers Squibb & Gilead - Blockbuster divestment risk analysis 185
Figure 149: Bristol-Myers Squibb & Gilead - Post-divestment analysis 186
Figure 150: Bristol-Myers Squibb & Gilead - Portfolio synergy analysis 187
Figure 151: Bristol-Myers Squibb & Genzyme - Blockbuster divestment risk analysis 188
Figure 152: Bristol-Myers Squibb & Genzyme - Portfolio synergy analysis 189
Figure 153: Bristol-Myers Squibb & Biogen Idec - Blockbuster divestment risk analysis 190
Figure 154: Bristol-Myers Squibb & Biogen Idec - Portfolio synergy analysis 191
Figure 155: Schering-Plough - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 193
Figure 156: Schering-Plough - Target companies' cost per ppt uplift ($bn) 194
Figure 157: Schering-Plough - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 194
Figure 158: Bayer - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 195
Figure 159: Bayer - Target companies' cost per ppt uplift ($bn) 196
Figure 160: Bayer - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 196
Figure 161: Boehringer Ingelheim - Diluted 2007-12 Rx growth rate analysis of all possible M&A permutations 197
Figure 162: Boehringer Ingelheim - Target companies' cost per ppt uplift ($bn) 198
Figure 163: Boehringer Ingelheim - Cost per ppt uplift vs. total Rx sales growth rate uplift for each target company 199
Figure 164: Boehringer Ingelheim & Gilead - Blockbuster divestment risk analysis 200
Figure 165: Boehringer Ingelheim & Gilead - Portfolio synergy analysis 201
Figure 166: Boehringer Ingelheim & Genzyme - Blockbuster divestment risk analysis 202
Figure 167: Boehringer Ingelheim & Genzyme - Portfolio synergy analysis 203
Figure 168: Boehringer Ingelheim & Biogen Idec - Blockbuster divestment risk analysis 204
Figure 169: Boehringer Ingelheim & Biogen Idec - Portfolio synergy analysis 205
Figure 170: Boehringer Ingelheim & Cephalon - Blockbuster divestment risk analysis 206
Figure 171: Boehringer Ingelheim & Cephalon - Portfolio synergy analysis 207
Figure 172: PharmaVitae universe - 2007 Rx sales ($m) vs. 2007-12 Rx sales growth rate (%) and 2007-12 absolute Rx sales growth ($m) 211
Figure 173: Hot targets - 2007-12 Rx sales growth rate uplift (percentage points) vs. cost per percentage point ($bn) for each potential Big Pharma acquirer 213
[Tabellenverzeichnis ausblenden]