Pharmaceuticals started the week with a merger Monday splash, as three deals hit the tape: Mallinckrodt (MNK) agreed to buy Questcor Pharmaceuticals (QCOR) for about $5.6 billion in cash and stock; Sun Pharmaceutical said it will acquire Ranbaxy in a $3.2 billion deal; and Roche (RHHBY) acquired privately held IQuum for up to $450 million.
This year has been expected to be a big one for mergers and acquisitions in pharmaceuticals thanks to a number of big players having deep war chests and a need to rebuild patent pipelines after a string of industrywide expirations on blockbuster drugs.
Monday sure didn’t do anything to disappoint those expectations for pharmaceuticals, adding upwards of $10 billion to the sector’s M&A tally.
Roche contributed by far the least to total deal value, while anyone holding QCOR stock should be smiling.
Here’s a quick look at the latest wheeling and dealing among pharmaceuticals:
Pharmaceuticals Deals: Roche Buys IQuum
Roche (RHHBY), the Switzerland-based maker of cancer drugs, struck a deal for up to $450 million to acquire IQuum
, which makes medical testing equipment. Under the deal’s structure, Roche will pay $275 million up front for the privately held company. Roche will then pay up to another $175 million if IQuum reaches certain product milestones.
Roche reached outside the core pharmaceuticals sector to buy IQuum. The deal helps Roche expand its offerings in its molecular diagnostic business, a technology that improves physicians’ ability to diagnose cancer.
“Patients will benefit from on-the-spot and accurate diagnoses, which will allow health care professionals to make rapid, informed treatment decisions in flexible settings,” Roland Diggelmann, chief operating officer of Roche Diagnostics, said in a statement.
Pharmaceuticals Deals: Mallinckrodt Buys Questcor
Anyone holding pharmaceuticals stock Questcor (QCOR) is probably breathing a sigh of relief. Mallinckrodt (MNK) is buying QCOR for $5.6 billion in cash and stock, and the equity part of the equation is pulling QCOR stock out of its doldrums.
Holders of QCOR stock will receive $30 a share in cash and 0.897 Mallinckrodt shares for each share of QCOR — a 27% premium over QCOR stock’s latest closing price. QCOR stock has been stuck bouncing between $50 and $70 for nine months.
Ireland-based Mallinckrodt is buying QCOR for its Acthar drug, which is used to manage difficult-to-treat autoimmune and inflammatory conditions. Although Questcor will operate as as a separate business unit within Mallinckrodt, the QCOR stock ticker will of course go away.
Pharmaceuticals Deals: Sun Pharmaceuticals Buys Ranbaxy
Indian generic drug-maker Ranbaxy has been a headache for Daiichi Sankyo (DSNKY) ever since its acquisition in 2008, and now Japan’s second-largest pharmaceuticals company is letting Ranbaxy go.
Daiichi Sankyo is selling its majority stake in Ranbaxy to another Indian drug company — Sun Pharmaceutical — in a deal worth $3.2 billion plus the assumption of $800 million in debt. Once the deal is done, Daiichi Sankyo said it would own 9% of the combined company.
Although the deal doesn’t have the star power of a Roche or QCOR, it’s an interesting shift in the pharmaceuticals business in Asia. The Ranbaxy acquisition will make Sun — already India’s No. 2 pharmaceutical company by market share — the fifth-largest maker of generic pharmaceuticals in the world.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
