European Biotech M&A: Often Last Resort, but Welcome Nevertheless

Consolidation among Europe's biotech firms is picking up, but less for strategic reasons than simply to secure the cash to survive. Whatever the drivers, though, and however ruthless the concurrent cost- and program cutting, M&A should help create better adapted, bigger companies-something investors have long been calling for. Indeed for most merging companies, M&A is just the first step towards more strategic business-building moves in the near future.

Onlookers have long been calling for more consolidation among Europe's 130 or so public biotech firms, more than half of which have a market cap of less than $50 million (€44.5 million), and one quarter of which have less than 12 months' cash. The recent spate of activity suggests their wishes may be coming true: according to Windhover's Strategic Intelligence Systems database, the number of M&A deals, both private and public, during the first eight months of 2003 already equals the total for the whole of 2002.

But some transactions in Europe appear as last-resort bids for survival, focused heavily on securing cash and cutting costs, rather...

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