2006 - The Year of the Deal

Today at the BIO International Convention Ernst & Young released their report, "Beyond Borders," their global biotechnology report for 2007. The result: 2006 is the year of the deal.

BIO convention goers get settled for Ernst & Young's presentation

a BIO conventioneer listens intently during Steven Burrill's talk

At 2 pm today the room filled to what turned out to be another standing-room only event. Stragglers who didn't make it in to the room had to wait outside the door until one of the lucky to score a spot inside left.

According to Ernst & Young competition among pharmaceutical buyers, created a strong and healthy deal environment. The average premium in M&A transactions with values over US$500 million increased to 60 percent in 2006. And, noted Ernst & Young, in a reversal of recent trends, pharmaceutical buyers gravitated towards early-stage platforms and technologies.

Steven Burrill's report, Biotech 2007, released yesterday agreed with the Year of the Deal assessment. "It is important to note that although 2004 and 2006 both recorded 225 transactions," reads the report, "the average deal size increased from $358 million in 2004 to $915 million in 2006."

So what does 2007/2008 hold? Ernst & Young's report reads like a bedtime story with a happy ending, "Big pharma's pipeline challenges are becoming more urgent, and the constrained financing environment and paucity of funding options for early-stage companies make deals an attractive alternative for biotech companies. Indeed, 2006 was a red hot year for biotech deals - but the months and years ahead may be even more impressive."