Throughout the first half of 2012, private equity-backed pharmaceutical companies were in higher demand than ever. 

The latest HBM Partners pharmaceutical/biotech M&A report found that $28.6bn (€23.5bn) was spent on 44 biopharma acquisitions during the first half of 2012, in Europe and the US. Compared to the same period last year, this shows a lower cumulative transaction volume ($53.1bn) but a higher number of deals (38).

Private equity-backed pharmaceutical companies represented seven of the 44 deals, accounting for $9.6bn in transaction volume. This is by far the highest number of such deals seen so far. In previous years only one or two private equity-backed companies had been acquired by larger pharmaceutical or biotech firms. 

“Many private equity houses shy away from investments in pharmaceuticals, because it is a very complex and highly regulated industry,” believes Ulrich Geilinger, partner at HBM Partners and lead author of the report. “The latest wave of transactions confirms, however, that this can be an attractive sector for investors with specialised know-how.”

HBM believes the strong deal activity in the sector will continue as privately held, smaller businesses will seek partnerships or put themselves under the wings of larger players. With public valuations of biopharma companies currently at high levels, the number of public takeovers will remain moderate.