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On one hand, in the biopharma ecosystem, large and complex mergers syphon time and energy away from smaller acquisitions and licensing deals. Chicago-based AbbVie's $54-billion planned purchase of Dublin-based Shire, for instance—recently killed by the new tax rules, costing AbbVie $1.6 billion in breakup fees— would have removed a serial biotech-buyer from the table. Before AbbVie's approach, Shire had already in 2014 bought two private biotechs—renal-focused Fibrotech Therapeutics based in Melbourne, Australia, for $75 million and San Diego-based Lumena Pharmaceuticals, a rare diseases company, for $260 million—and was reportedly closing in on a multibillion dollar takeover of NPS Pharmaceuticals of Bedminster, New Jersey. “When you see companies like Shire being taken out, it does have an impact” on private biotech dealmaking activity, notes Neil Mackison, head of European Healthcare investment banking at Piper Jaffray in London.
But even while Shire was away from the table, smaller-scale biotech acquisition activity remained steady; almost two dozen private biotechs have been acquired in sub-$500-million deals so far in 2014, according to Informa's Strategic Transactions database (Table 1). Ten of those involved a big biotech or big pharma buyer—marginally higher than average for this category of purchaser, according to Piper Jaffray's Mackison.