|[June 09, 2014]
Fitch: Merck Buy of Idenix Underscores Therapeutic Add Focus
NEW YORK --(Business Wire)--
Additional mergers and acquisitions (M&A) activity in the pharmaceutical
sector highlights an increased focus on large branded drugmakers seeking
to fill gaps or expand into various therapeutic areas, according to
Fitch Ratings. Merck & Co. (MRK) Monday announced it had agreed to buy
Idenix Pharmaceuticals Inc. for approximately $3.85 billion in order to
amplify options for treatment of hepatitis C (HCV).
HCV is an important disease in terms of mortality, morbidity, and
growing number of addressable patient populations. Merck said the
agreement would create shareholder value by pairing Idenix's success in
HCV regimens, which includes a portfolio of HCV candidates, with Merck's
experience to develop fixed dose combinations. The transaction is
expected to close at the end of the third quarter.
The pharmaceutical space has seen a spate of M&A activity as firms
attempt to amass scale, broaden portfolios, and explore tax advantages
as a function of transactions. Despite past and ongoing industry
consolidation, we are mindful that there are still a significant number
of smaller players performing research in areas where some big pharma
companies have not ventured or had success.
Fitch believes the industry will still maintain high interest on
targeted acquisitions/joint ventures to support their internal research
and development and commercialization efforts. Fitch views the recent
attempt by Pfizer to acqure AstraZeneca as an exception to the broader
trend of targeted transactions.
As we have stated prior, we expect major pharmaceutical companies will
continue to consider divestitures of businesses that are not core to a
business model focused on biomedical innovation.
Merck recently sold its consumer products business to Bayer AG and has
also strengthened its product pipelines in an attempt to support
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit
market commentary page. The original article, which may include
hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com.
All opinions expressed are those of Fitch Ratings.
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