The pharmaceutical sector has seen a lot of deal activity in the past 18 months, with large drug companies acquiring their smaller, more nimble and often more innovative counterparts.
Part of the motivation behind this wave of acquisitions, worth a combined $220bn (£152bn) in the first half of 2015, is access to crucial R&D into new drugs, with a view to accelerating their commercialisation.
A handful of global players are behind the majority of the deals in the sector as they seek to increase their footprint in every part of the pharmaceutical supply chain.
US leads
Top of the leaderboard in terms of deal value is Pfizer whose ongoing $160bn (£105bn) acquisition of Allergan to boost its presence in therapeutic areas such as dermatology, eye care, gastrointestinal, neuroscience and urology, is the largest ever recorded in the sector. While the US giant has previously sought counsel from Clifford Chance, Dentons, DLA Piper and Kaye Scholer, Skadden Arps Slate Meagher & Flom has advised it extensively in the past year. Pfizer turned to Skadden for the Allergan deal, with the law firm previously also advising it on its abortive attempt to buy UK rival AstraZeneca for $118bn in 2013/14, and the divestiture of its nutrition business to Nestlé for $11.85bn in 2012.
Skadden is also main adviser to Valeant Pharmaceuticals, one of the most acquisitive companies in the sector. Lawyer Market Intelligence (LMI) data shows it played an advisory role in close to 10 of Valeant’s acquisitions in the past three years, including its $14.5bn play for Salix Pharmaceuticals in 2012 and the addition of Sprout Pharmaceuticals for $1bn last summer. The New York-headquartered firm also counts Merck, Centene and Baxter International among its clients.
Significantly, earlier this year, the European Commission approved Pfizer’s $17bn acquisition of target injectable pharmaceuticals company Hospira, which was represented by Skadden. Pfizer, in turn, turned to Ropes & Gray. Ropes’ pharma team was kept busy in 2015, representing Par Pharmaceuticals in its sale to Endo International and Dublin-based Shire in its proposal to merge with Baxalta, Baxter International’s biopharmaceutical spinoff business. Boston-based M&A and private equity partner Christopher Comeau has advised clients Pfizer and Shire on more M&A transactions than any other at the firm.
Incidentally, Shire’s go-to advisers are Davis Polk & Wardwell’s George Bason Jr, global chairman of the M&A practice, and William Chudd, a corporate partner in the firm’s New York office. Between them, the two have advised the company on its acquisition of Bikam Pharmaceuticals, FerroKin BioSciences, Lotus Tissue Repair, Lumena Pharmaceuticals, New River Pharmaceuticals, NPS Pharma, SARcode Bioscience, ViroPharma and Abbvie’s failed takeover bid.
Two other highly active law firms in the sector are Covington & Burling and Cooley. LMI data reveals that Cooley has the biggest proportion of pharmaceutical and healthcare sector clients (53), mostly advising companies on the sell-side. San Diego-based M&A practice head Barbara Borden has led on several of Horizon Pharma’s acquisitions, and on the sale of Auspex Pharmaceuticals, Cardioxil Pharmaceuticals and Scioderm and to larger market players.
Covington & Burling’s London-based partner Lucinda Osborne is one of the firm’s key partners in the sector, and counts AstraZeneca a key client. She has advised the company on a number of deals including its acquisition of Actavis branded respiratory business in the US and Canada for $600m, and licensing agreements with Heptares Therapeutics, Isis Pharmaceuticals and Moderna Therapeutics.
Other law firms getting more involved in the sector are Cleary Gottlieb Steen & Hamilton, Kirkland & Ellis and Cravath Swaine & Moore, the latter having recently picked up a mandate advising diagnostics testing company Alere on its $5.8bn takeover by Abbott Laboratories.
Meanwhile, in Europe
European firms are playing an increasingly significant role in international pharma deals although their focus is still on EU primes, which are still busy deal-wise than their US counterparts.
According to LMI data, the company with the largest number of legal advisers in the FTSE 100 is GlaxoSmithKline, using over 50 firms –national and international. By contrast, its competitor AstraZeneca is known to use just nine. Between them, these two employ nearly a quarter of the UK’s top 100 law firms for issues ranging from IP to employment and litigation.
Allen & Overy (A&O) has most pharma clients (13), having won mandates from Bayer, GlaxoSmithKline and Novartis on a range of transactions. Frankfurt finance partner Dr Neil Weiand has advised on a large number of funding deals for Asklepios Kliniken, Bayer and Merck. Shire has turned to Slaughter and May corporate partner Martin Hartrell on a number of occasions, including on AbbVie’s proposed a £30.1bn takeover and on the Baxalta deal.
Wragge Lawrence Graham & Co life sciences IP partner Patrick Duxbury is one of the most active in the sector, having advised clients including arGEN-X, Astellas, AstraZeneca, Chroma Therapeutics, GlaxoSmithKline and MedImmune, on a number of deals.