Round-up of pharmaceutical mergers and acquisitions during 2001

After the year started with rumblings of further pharmaceuticalindustry consolidation in both Europe and the USA, merger and acquisition activity in 2002 declined on the previous 12 months as market conditions became increasingly difficult, with companies and investors alike growing ever more cautious.

Moreover, big pharma, often looking for a quick fix to beef-up product pipelines via M&A activity in the face of mounting generic competition and a dearth of home-grown blockbuster candidates, found the going heavy, with many drug majors losing significant ground as an estimated 15 blockbusters went off-patent at end-2002. Meanwhile, smaller firms hoping to attract venture capitalists struggled, as such resources all but dried up in comparison to previous years, with many venture capitalists now in a position only to manage their investment cycles rather than aggressively expand.

Few major deals took place, although the most notable exception came in the form of Pfizer's mega-merger with Pharmacia (Marketletters passim), which is expected to close in the first quarter this year and is valued at around $54.00 billion. Although the deal was the leading light in M&A activity during 2002, it also served to illuminate the negative sentiment which came to characterize markets during the year. Stock prices in the sector fell across the board on the back of the deal when, surely, during more prosperous times, such a bold move from Pfizer would have buoyed confidence.