Who's The Next Big Pharma Acquisition?

In a new report, Jefferies analyst David Steinberg looked at the frenzy of M&A activity that has been happening in the specialty pharmaceuticals space in recent years. According to the report, 2014 was a blockbuster year for buyouts, and 2015 is on pace to be a record year.

Perfect M&A Environment

In the report, analysts explain that the current M&A cycle in pharmaceuticals has been driven by three key environmental factors: cheap debt, tax inversions and the creation of “cash” earnings reporting, which has allowed buyers to report immediate earnings accretion following a transaction.

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Analysts describe the current M&A cycle, which began in 2005, as “robust,” and the current stage of the cycle particularly strong.

The Numbers

Last year saw 45 pharmaceutical M&A transactions worth $141 billion dollars. While 2014 was the strongest year so far for the current cycle, the 16 deals so far in 2015 totaling $99 billion puts this year well ahead of last year’s pace.

Despite the major momentum, analysts caution that as little as one bad deal could bring the current M&A boom to a screeching halt.

Top Prospects

Jefferies names the following companies as the current top potential pharmaceutical buyout targets.

• Valeant Pharmaceuticals International Inc (NYSE: VRX)
• Shire PLC (NASDAQ: SHPG)
• Perrigo Company Public Limited Co (NYSE: PRGO)
• Zoetis Inc (NYSE: ZTS)
• MaLlinckrodt Public Limited Co (NYSE: MNK)
• Jazz PharMaceuticals Public Limited Co (NASDAQ: JAZZ)
• United Therapeutics Corp (NASDAQ: UTHR)
• Pacira Pharmaceuticals Inc (NASDAQ: PCRX)
• Insys Therapeutics Inc (NASDAQ: INSY)
• The Medicines Co (NASDAQ: MDCO)
• DepoMed Inc (NASDAQ: DEPO)
• Spectrum Pharmaceuticals Inc (NASDAQ: SPPI)
• Kythera Biopharmaceuticals Inc (NASDAQ: KYTH)
• Revance Therapeutics Inc (NASDAQ: RVNC)
• Xenoport Inc (NASDAQ: XNPT)
• Mylan NV (NASDAQ: MYL)
• Akorn Inc (NASDAQ: AKRX)
• Impax Laboratories Inc (NASDAQ: IPXL)
• Amphastar Pharmaceuticals Inc (NASDAQ: AMPH)
• Anacor Pharmaceuticals Inc (NASDAQ: ANAC)