Moody's sees pick-up in pharmaceutical industry M&A in 2013
LONDON, April 23
LONDON, April 23 (Reuters) - Cash-rich drug companies are likely to make more acquisitions in 2013 after a thin year for deals in 2012, ratings agency Moody's Investors Service said on Tuesday.
In an review of the global sector reiterating a "stable" outlook, Moody's said leading companies such as Roche, Pfizer and Novartis had deleveraged after big deals three or four years ago and could start shopping again.
AstraZeneca is also looking for acquisitions to strengthen its limited drug pipeline.
"Cash levels have been rising at certain players and debt funding is likely to remain inexpensive, setting the stage for heightened M&A activity this year," the agency said.
"However, we would expect such acquisitions to generally be small to mid-sized rather than transformational."
Bolt-on acquisitions of between $1 billion and $2 billion a year can be digested by large pharmaceutical groups without risking their credit ratings, but larger deals are generally negative since they are often financed with debt.
In 2012, the sector saw few sizeable transactions, with the exception of Gilead's $11 billion purchase of Pharmasset and the joint acquisition of Amylin for $7 billion by Bristol-Myers Squibb and AstraZeneca.