By Meg Tirrell and David Welch
Health-care companies with deep pockets and shallow product pipelines are poised for a busy year of acquisitions, with biotechnology firms likely to be among the most prominent targets even as they trade at record highs.
The seeds of this year’s deals may be planted next week at JPMorgan Chase & Co. (JPM)’s annual health-care conference in San Francisco, where more than 300 companies will present to thousands of investors about the year ahead. Meanwhile, business development executives will be meeting in hotels surrounding the conference that begins Jan. 13.
Large drugmakers from Merck & Co. (MRK) to Bristol-Myers Squibb Co. (BMY) are dealing with patent expirations on top medicines and cutting researchers as they refocus their product development strategies. At the same time, prices on targets are expected to stabilize after last year’s run-up, said Jeff Stute, JPMorgan’s head of health-care investment banking.
“We see M&A in the health-care sector being up materially in 2014 at all size levels and across all subsectors,” Stute said in a telephone interview. “Buyers and sellers will get comfortable with the new reality of where assets are priced.”
Biotechnology companies in particular had a standout 2013, with the Nasdaq Biotechnology Index gaining 66 percent, topping a 30 percent increase for the Standard & Poor’s 500 (SPX), and closing yesterday at a record high of 2,449.25. The industry saw the most IPOs since 2000, as investors were drawn to the prospects of revenue growth in an industry seeing a record number of new drug approvals over two years….