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PharmaSphere: Asia Pacific Deal Trends, 2004-2013

Asia-Pacific pharmaceuticals market: Top 15 deals reached value of $51.4 billion between 2004-13


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2014-04-04 18:38:04 - PharmaSphere: Asia Pacific Deal Trends, 2004-2013 - a new market research report on companiesandmarkets.com

The top 15 pharmaceutical and healthcare deals in the Asia-Pacific (APAC) region during January 1, 2004 through June 1, 2013 were in the categories of mergers and acquisitions (M&As), licensing agreements, and collaborations and partnerships. These 15 deals represent a total value of $51,397m, based on the assumption that the various agreed-upon milestones have been achieved in order to ensure clarity and standardization in the analysis presented in this report.

In terms of M&As, mergers among Japanese firms provided the most impetus, with Takeda Pharmaceutical Company acquiring Nycomed as well as Millennium Pharmaceuticals, both in record deals for a Japanese company, and the Daiichi Sankyo merger.

Among the licensing agreements, the deal between the Danish firm Lundbeck and Japan´s Otsuka Pharmaceutical

 

 

registered one of the highest values at $1,800m, and focuses on the development and commercialization of up to five innovative psychiatric and neuroscience products. The partnership with the highest value was between Amgen and Takeda for $902m.

In terms of the split in the total deal value, M&As had the largest share, representing more than half at 56%. The growing interest in the APAC region is part of the shift in the industry dynamic towards the emerging markets to boost revenue growth.

Licensing agreements take the second spot after M&As, with over 31% of the total deal value. In this category, the deal structure and motivation has predominantly been towards the licensing of product candidates that are still undergoing clinical trials. The agreements represent a mix of regional firms, particularly from Japan, seeking to add to their research pipeline. Strategic collaborations and partnerships come in at a distant third at 12.57%, representing the rest of the total deal value.

The number of deals in the APAC region represents 32.6% of the total deals globally between January 1, 2004 and June 1, 2013.

The largest number of deals involved drugs that are already marketed, followed by Phase II, Phase III, and preclinical-stage drug candidates. This trend indicates that one of the key areas of growth that pharmaceutical firms are seeking in the APAC region is in marketing drugs. Additionally, the interest in Phase II and Phase III drug candidates is primarily from pharmaceutical firms in the region that are seeking to boost their pipeline in a bid to increase their presence in developed markets such as the US and the European Union (EU).

The focus on these three therapy areas is in response to a higher investment in disease surveillance and detection rates. In oncology, cancers of the lung, breast, colorectal, cervix, and prostate are among those witnessing a rise in rates in the region. Also, investment in this therapy area also proves significant for domestic firms seeking to enter or expand in the US and the EU, both of which have the highest incidence of all types of cancer combined for both sexes, according to the World Health Organization (WHO) (Globocan, 2008) The infectious diseases area, particularly with the outbreaks of severe acute respiratory syndrome (SARS) and bird flu emanating and impacting the region´s population, has meant investment interest. Other diseases that are endemic in the region, including hepatitis, tuberculosis, malaria, and dengue fever, are also experiencing an increase in infection rates, thereby attracting investment.

The key drivers of growth in the APAC region include the need for geographical expansion in a bid to boost revenue streams and sustain long-term growth. Over the past decade, with the economic downturn and the spiraling cost of developing drugs, pharmaceutical firms have had to tackle other challenges in their traditional stronghold markets of the US and the EU. These market access challenges involved a higher scrutiny of the safety and effectiveness of new drugs, with a rising rate of failure to gain marketing approval in the key markets. Shrinking research pipelines, higher costs of development and a reduction in the number of drugs progressing to late-stage clinical trials are further indication of the challenges facing innovative pharma companies. Additionally, regulatory challenges increased in the form of reimbursement restrictions and in the pricing of innovative drugs.

These challenges come at a time when pharmaceutical firms are undergoing a cost-cutting drive in order to maintain their profit margins.

In such a scenario, the lure of the yet untapped markets in the APAC region, with countries such as India and China experiencing a boom in their economic growth and increasing investments in healthcare infrastructure and delivery, has provided the momentum for the both the number and value of the deals occurring in the region. However, as in most businesses, this has not come without its own regional challenges. The consolidation among pharmaceutical companies, hospital chains, and marketing and distribution companies reflects the internal changes in dynamics, which are driven by government investment and the higher disposable income structure of an increasing segment of the population, which has increased the affordability of expensive treatments.

While there is optimism regarding the uptake of healthcare and pharmaceutical products in the APAC region, the challenge of continued governmental scrutiny over providing universal healthcare access has resulted in a greater number of entry barriers. These range from price fixing to uncertain levels of reimbursement available in these markets. Also, with healthcare policy still evolving, the fluctuating landscape has meant that global pharmaceutical firms have remained somewhat cautious after the initial flurry of investments in the APAC region.

Even so, this region is expected to be of interest, as the percentage of revenues from the emerging markets and the rest-of-the-world (ROW) countries for firms such as Pfizer, GlaxoSmithKline (GSK), Merck & Co., Novartis, and other Big Pharma companies is expected to account for close to half of their total revenues in the next decade.

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