New Trend in Big Pharma: Spinoffs

Pharmaceutical companies frequently carry out M&A activities within the scope of new product development. However, in the past 5 years factors such as the pressure from governments to prohibit increases in drug prices and some companies being overdependent on a single product have significantly increased the number of megamerger transactions in the sector. For example: • Bristol-Myers Squib’s acqusition of oncology focused Celgene for 74 billion USD, • AbbVie’s acquisition of Allergan for 64 billion USD; in order to compensate for the loss of income that will occur due to the expiration of the patent of Humira, one of the biggest drugs of AbbVie, • Japanese Takeda’s acquisition of Shire Pharmaceuticals for 63 billion USD.

However, we are facing a new trend in the industry which started in 2019 and continues in 2020: companies divest off-patent drugs, generic drug divisions and divisions which grows slower / faster than the rest of the company, through spinoffs.