Skip to main content
Premium Trial:

Request an Annual Quote

European Genomic Firms Set to Lead M&A Trend in 02; US Sector Seen as Important Partner

FRANKFURT, Germany, Feb. 19 - The consolidation of the European genomics sector is on.

 

M&A activity among European genomics companies is set to accelerate this year as companies with enough cash begin aggressively eyeing smaller or weaker firms struggling amid growing competition and a contracting private equity market.

  

"There is a rush to grab land," said Glenn Crocker, head of biotechnology at Ernst & Young in London.

 

Crocker and others say that as genomics companies continue to evolve rapidly--and as more of their tools and technologies become commodities--they increasingly see the need to adopt, adapt, and improve. These firms also recognize that mergers and acquisitions have traditionally been the quickest ways to reach those ends.

 

The M&A environment in Europe may also have an interesting twist: The land that is grabbed may be split between the US and Europe, and trans-Atlantic courtships may lead all European M&A activity.

 

Catching--and joining--the Yanks

 

Crocker and other experts believe that mergers and acquisitions in 2002 involving European genomics firms will exceed 2001 levels and even reach numbers set by their US counterparts. In fact, many believe it's possible that European M&A deals will outnumber American firms next year in number if not in dollar amount.

 

European genomics firms, generally smaller and less mature than American genomics firms, are only now beginning to go through the increased consolidation craze that pounded the fatter US sector for the past couple of years.

 

Crocker said that a preliminary count showed there were 50 European biotech mergers and acquisitions in 2001. (A final figure will replace this one when Ernst & Young releases its annual European Biotech Report in April, he said.) Crocker and others reckon there will be more deals in 2002, though no one interviewed for this article would hazard a guess.

 

Numbers for mergers or acquisitions involving US companies were not available at press time, though there were 77 biotech M&A deals in 2000 and 46 deals in 1999, according to the research and tracking firm Recombinant  Capital. 2001 is expected to come in short of 2000 numbers.

 

International acquisitions were a common sight among European M&A activity last year. Leading that effort was Lion Bioscience's acquisition of US-based Trega Biosciences, and later NetGenics; Sequenom's purchase of UK-based Gemini; and US-based Sangamo's pick-up of Gendaq, headquartered in the UK.

 

Trans-Atlantic deals will likely make an even greater showing in 2002. "Europeans companies are looking to get a foot in the door of the US," said Oliver Schacht, chief financial officer of Epigenomics, a privately held firm based in Berlin. Friedrich von Bohlen, who runs Lion, echoed that notion and said that for a European biotech company, "if you want to be successful, you have to be in the USA."

 

Beside the need to grow and increase product lines, European companies on the prowl for acquisition targets overseas also cite the desire to broaden their customer base and pilfer local talent.

 

And the M&A option has also become attractive, even obligatory, to many potential target companies based in Europe as the future for an IPO window or VC cash looks increasingly bleak.

 

Katharina Uhlenbrock, a biotech analyst at Deutsche Bank in Frankfurt, said that investors are no longer as keen to throw money at smaller-cap companies as they once were. Today in Franfurt, where the Neuer Markt's tech bubble once rivaled America's, German investors are seeing smaller-cap companies as having too little liquid and too much volatility.

 

The take-home message is increasingly becoming: 'It's unlikely you'll get the cash to grow organically, so please find another method.' "Many smaller companies that need cash need to do something fast to grow," Uhlenbrock said. "And acquisitions are a good way to grow fast."

The Scan

Not as High as Hoped

The Associated Press says initial results from a trial of CureVac's SARS-CoV-2 vaccine suggests low effectiveness in preventing COVID-19.

Finding Freshwater DNA

A new research project plans to use eDNA sampling to analyze freshwater rivers across the world, the Guardian reports.

Rise in Payments

Kaiser Health News investigates the rise of payments made by medical device companies to surgeons that could be in violation of anti-kickback laws.

Nature Papers Present Ginkgo Biloba Genome Assembly, Collection of Polygenic Indexes, More

In Nature this week: a nearly complete Ginkgo biloba genome assembly, polygenic indexes for dozens of phenotypes, and more.