Figure 1:Leading pharmaceutical dealmakers of2016. buy-side deals, andfive announcednodealsatall. We examinedthe thesecompanies,2015 revenue). 22announcedfour Of orfewer in 2016by companies(identifiedby thetop total 50pharmaceutical licensing deals/jointventures andresearch-only deals—announced andacquisitions(M&As),actions—mergers optionsto acquire, trans­ landscapeby reviewing thekey buy-side ofthedealmaking platforms or introduce synergies to strengthen their organizations. portfolio, expandinto therapy new areas, accessnovel technology other side, to are increase usuallylarger their companieslooking through Buyers, or capacity partnership. ontheing expertise to growsmaller companieslooking by raisingcapitalandaccess assetsandtechnologies,on pharmaceutical sellersare typically Viewed simply, eachdealhasabuyer andaseller. dealsfocused In Harrison K. &Richard Vitez J. Laura companies provides insights into strategies. dealmaking Analysis of thedealssigned recently by major pharmaceutical pharma dealmaking big in Strategic trends that announced five or more buy-side transactions in 2016. that announcedfive ormore in2016. buy-sidetransactions deals/joint ventures andresearch-only deals)for by companiesamongthetop 2015sales) 50companies (asranked the23 pharmaceutical

Number of announced transactions We setoutto understandthestrategies beingemployed onthe 10 15 20 25 30 0 5

J&J Novartis

Bayer

Pfizer

Roche Merck & Co.

GlaxoSmithKline Sanofi

AstraZeneca

AbbVie

The key transactions (mergers andacquisitions, transactions options toThe key acquire, licensing Bristol-Myers AmgenSquibb

Boehringer Ingelheim

Eli Lilly - least five buy-sidedealsin2016)more depth. remaining 23companies(thatis, those companiesthat disclosed at (for technology-based early-stage example, in cancer) orto fund very of the bars in (shown inthegreen transactions portion research-only exploratory hard largeto companies are innovate pharma working by executing by revenue.ranked dealmaker,5th mostactive althoughthecompany was19thwhen actions. Similarly, the17dealsannouncedby madeitthe billion, but 10th by deal volume, with ten announced buy-side trans ( for these companies, although there are afew notable exceptions Fig. 1 A dissection of deal volume by transaction type shows that several of deal volume type by A dissection transaction roughlyRevenue volume correlated withannouncedtransaction

Takeda ). Celgene, for 27thby example, revenue wasranked with$8

Allergan

Merck KGaA Fig. 1 ). These may be to evaluate clinical combinations

Astellas

Otsuka Mergers andacquisitions Options to acquire venturesLicensing deals/Joint deals Research-only Total revenues in2015

Biogen

Celgene DainipponDaiichi Sumitomo Sankyo biopharmadealmakers.nature.com |June2017 |

0 25 50 75 Total revenues in 2015 (US$ billion) (US$ 2015 in revenues Total - B3 B3

DredK/iStock/Thinkstock

feature feature B4 transactions in2016. transactions by companiesamong thetop 2015sales)thatannouncedfive 50companies(asranked ormore23 pharmaceutical buy-side the (mergers andacquisitions, optionsto acquire, licensingdeals/jointventures andresearch-only deals)withan identifiable stagefor Figure 2: Transactions companies for in2016,by leadingdealmaking stageofdevelopment. interests scienceand ofthecompany viaaccessto next-generation AbbVie Ventures to augment thecore states thatitisseeking R&D Celgene, Ingelheim, Boehringer Takeda, AmgenandPfizer. GSK, withtransformative potential.science initiative, early-stage whichwassetupin2013to focus onvery volume.action This isinlinewiththegoalsofSanofiSunrise Sanofi, for projects which made early-stage up over 70% of trans volume for eight companies in the group. At the top of this list is ofthebarsin blue portion for thatsuchassets(thelight assetshighlighted thefact early-stage respect to dealmaking. and technologies canprovide insightsinto strategies corporate with Examining the mix of development stages of the accessed assets Early-stage or late-stage? involved innineM&Adealsontop ofitseightlicenseagreements. vidual companies, withthenotableexception ofAllergan, whichwas ofthe total volumeproportion of deals overall and for most indi type. onlydealsofthistransaction andOtsuka—announced (GSK) or more GlaxoSmithKline dealsinthiscategory, andthree—, dealmakers—J&J, , Roche, Takeda and Bayer—announced ten announced amongthe23companiesexamined. Five oftheseactive the barsin dealswithoutpublicdisclosure. exploratory that these and othercompanies probably madeadditional such means dollarvalueoftheresearch-only transactions non-existent Roche, Merck & Co. and Merck KGaA. (J&J), smallThe or typically research. included & Johnson Johnson dealmakers Active exploratory Boehringer Ingelheim Boehringer Dainippon Sumitomo Bristol-Myers Squibb Bristol-Myers Other companiesfocused dealsincludeAbbVie, onearly-stage Other the 23 companies according to the level of transactions Charting M&As blue in the bars (shownin in dark of Licensing dealsandjointventures (shown intheblueportion |June2017 | GlaxoSmithKline Daiichi Sankyo AstraZeneca Merck KGaA Merck &Co. Fig. 1 Allergan Celgene Novartis Astellas Amgen AbbVie

Biogen Otsuka Takeda biopharmadealmakers.nature.com Eli Lilly Roche Sanofi Bayer Pfizer ) were the most active category; 166suchdealswere ) were category; themostactive J&J 0 Fig. 2 Early ) madeup50%ormore ofthedeal 10 Clinical Fig. 1 20 ) made up a smaller Approved 30 Non-pharmaceutical asset Non-pharmaceutical - ­ 40 the company portfolio, withinlimited often territories. drugsto butusefulapproach ofaddingmarketed more conservative market. The remainingfor transactions approved assetsrepresent the of oncologycombinations, inthis casewithdrugsalready onthe deal for approved assets. Again, many of these were for the testing tocontributes thehighvolume ofdealsinoncology. with otherdevelopment-stage that drugs—acommonscenario others were clinical-stagealliancesto test Bavencio incombination ofthesedealswereSome for companiondiagnostics for Bavencio; ogy drugrecently approved by theUSFood andDrugAdministration. around Bavencioall ofitsdealactivity (avelumab), animmuno-oncol fortransaction apreclinical program, whereas Merck focused KGaA announced thelargest numberofclinical-stagedealsbutjustone focused ondealsfor primarily clinical-stageassets. Allergan world.the and have research placedinnovation centers inkey hubsaround models for areas ofgreat medicalneedandscientificchallenge, and GSKhave allstated theirinterest inadoptingopeninnovation companies.approach withearly-stage for working Takeda, Amgen acquisition option transactions, a relatively infrequent but important Celgene hashelpedpioneer partners. with external ‘build-to-buy’ R&D investment program thatincluded€1.5billionfor collaborations launched afive-year Ingelheim 2015, Boehringer scientific leaders. In breadth ofthecompanies’ interests. devices, diagnostics, animalhealthproducts andmore, reflecting the mainlycomprises technology platforms, but also can include medical nondrug assets. dealspaceforThe nonpharma thesecompanies which each invested over by volume 50% oftheirdeal efforts in assets—mostnotablyJ&J,pharmaceutical Lilly, Bayer andBiogen, Percentage All butonecompany onthelist(AbbVie) alsoinvested innon­ Half of the companies (12 out of 23) also announced at least one several ofthe23companiesAt theotherendofspectrum, 50 60 70 Proportion of key transactions transactions Proportion ofkey 80 90 100 - RNAi program and a gene-therapy vector,RNAi program andagene-therapy respectively. Pfizer announcedealsfor preclinical-stage cardiovascular assets—an devoid ofinnovation, however, for example, 2016saw Amgenand look elsewhere opportunities. for market The area isnotcompletely of clinical in this area trials drug developers driving factors are to key focused on other unmet needs. The size, length and thus expense remain majorcausesofdeathworldwide, companiesappearto be diseaseandstroke thatischemicheart industry. thefact Despite theleadingtherapeuticarea inthepharma vascular disease—once prominence ofthistherapeuticarea. the substantialunmetmedicalneedincancercontinueto drive the inflammation orinfection. and The promise ofimmuno-oncology in oncologythanfor thenext-largest therapeuticareas ofneurology, aggregate dealvolume for these23companieswasfivefold greater with 11companiesannouncingfive ormore transactions. The one ofthe23companies(Biogen)madeatleastdealinoncology, ( ofoncology to theindustry importance well-known A breakdown of top buy-sider dealsby therapy area illustrates the focus Therapeutic shading. numbersofdealsare indicatedin 2016.Higher withdarker by companiesamongthetop2015sales)thatannouncedfive 50companies(asranked pharmaceutical ormore buy-sidetransactions acquisitions, optionto acquire, licensingdeals/jointventures andresearch-only deals)withanidentifiabletherapy area for the23 Figure 3: Transactions companies for in2016,by leading dealmaking therapy area.

At the other end of the popularity scale for dealmaking iscardio scalefor dealmaking At theotherendofpopularity Therapy areas Gastrointestinal Endocrinology/ Autoimmunity/ Cardiovascular Dermatologic inflammatory inflammatory metabolism Ophthalmic Neurology Diversified Oncology Infection Other

Merck & Co. 11 1 2 1 1 Bristol-Myers SquibbRoche

Celgene 11 1 1 2 1 1 8 1 1 1 8 Pfizer

Takeda 2 1 2 1 1 2 2 7 5 1 1 2 6

J&J

AbbVie 1 2 2 1 2 1 2 2 5 Fig. 3

Amgen 1 1 1 5 ). All but ). Allbut

Novartis 1 1 1 5 Merck KGaA - 1 1 2 2 2 5

AstraZeneca

Boehringer Ingelheim 5 Philadelphia, Pennsylvania, USA. ofThomson Intellectual andScience Division ), the Property (formerly atClarivate Officer HarrisonisChief Scientific Analytics Richard K. Laura J.Vitez andManager Analyst isLifeSciences Deals presence inmore narrowly definedfields. therapy areas, strategy to have suggestinganexternal adeeper Merck andCelgene, KGaA whichannounceddealsinonlyafew are Ontheotherendofspectrum companiessuchas markets. strongly indiverse indicative ofitsstrategy to beaglobalparticipant Pfizer, 6).Allergan’s 8;andNovartis, is activity vigorous dealmaking announced dealsinmore thanfive therapy areas (Allergan, 10;J&J, 9; to narrowly focused. the23companieswe studied, onlyfour Of difficult problems ofneurodegenerative disease. interest overindustry years past, as innovators strive to solve the very neurology, or more. with six announcing two This is anexpansion of and infectious diseases. companiesdidatleastone dealin Thirteen companies continue to explore dealsinneurology, inflammation Finally, company strategies by therapeutic area range from broadly oncologyandcardiovascularBetween disease, anumberof 1 1 1 1 4 Bayer 1 2 1 3

Astellas 1 2 2 Number of key transactions (mergers and (mergers and transactions Number ofkey Dainippon SumitomoOtsuka 1 1 2

Allergan 1 1 1 2 1 2 1 2 1 2 1 2 2 1 1 1 2 1 Daiichi SankyoEli Lilly 1 1 1 1 1

GlaxoSmithKline 1 1 1 Sanofi 1 2 1 1 1 biopharmadealmakers.nature.com |June2017 |

Biogen 1 1 1

1 1 2 2

Total

11 12 15 15 16 20 99 9 6 7 7

Number of transactions B5 B5

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