Skilful asset swapping in the time of big data

Independent investment analyst, Managing Director EQUI.TS GmbH_ Big data analytics is poised to change the way business is done in the life sciences. A string of recent M&A transactions illustrate this trend.

Recently, multi-billion dollar merger and acquisition campaigns have caused a stir worldwide. For example, Sanofi bought antibody specialists Ablynx, and Gilead acquired cell therapy developer Kite Pharma (competitors of Bluebird Inc. and Medigene AG) to enter the field of cancer therapies with genetically engineered cells. Novartis responded with the expansion of its own gene therapy business and swallowed Avexis for US8.7bn.

The new Novartis CEO, Vas Narasimhan, justified his spending spree, calling the acquisition an “extraordinary opportunity.” The deal will also benefit in-town rival Roche, who owns a 4.2% stake in Avexis and should therefore expect close to US$340m coming in. Among other things, the money is expected to fund the acquisition of the private US company Viewics. With the Californian’s analytical tools and cloud-based IT solutions, Roche plans to make more data-driven, and hence better, decisions in its labs, plants, and offices. Obviously, without big data, there will be neither drug development nor diagnostics in the future. This is also smooth sailing for recently listed Roche competitor Siemens Healthineers AG.

Developing its “Digital Ecosystem Platform,” Viewics was an important business partner for Siemens – at least in the past. Less disruptive, but more continuously changing is the over-the-counter (OTC) landscape. This is mainly due to the nature of the business model. To leverage value, you have to master branding and complexity – both fields where big data expertise comes in handy. For Bayer, the division was – and still is – so important that former CEO Marijn Dekkers spent more than €10bn in 2014 to purchase the OTC medicines from US competitor Merck & Co. Under OTC manager Jörg Reinhard Bayer rose to global No. 2. After leaving Bayer, Reinhard made his mark at Novartis. Following a trade deal with GSK under his aegis, Reinhard created a joint venture that is clearly the No. 1 in the OTC industry. Fast forward 2018: Novartis boss Narasimhan thinks now is the time to sell the 36.5% stake in the JV for US$13bn to partner GSK. Also leaving the OTC business is German Merck KGaA which  –after negotiating with Nestlé and Reckitt Benckiser – sold its unit in the end for €3.4bn in cash to Procter & Gamble. Without a doubt, the US consumer goods giant has more branding and marketing power than Merck, where the unit was deemed too small.