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Life Sciences Industry: Quarterly Deal Review--Fourth Quarter 2004
Decision Resources, Inc, Feb 2005, Pages: 15
The life sciences industry closed 2004 with a robust fourth quarter. The industry demonstrated its vitality by attracting more than $10 billion in financing, owing mostly to a thoroughly rebounded debt financing environment. Also contributing to the quarter were 20 life sciences IPOs, 10 of them on the U.S. market. The financial success within the industry mirrored the strength of broader financial markets during the fourth quarter. The Dow and the NASDAQ climbed during the quarter, capping a very strong year, while industry indices for the most part kept pace. Deal making within the industry kept a steady pace during the quarter, driven by a surge of licensing alliances. Ownership changes took place at a steady rate, led by Johnson & Johnson’s proposed $25 billion purchase of Guidant.
In this report, we review select IPOs, SPOs, debt financings, private placements and venture capital deals, ownership changes, and company alliances. We also examine the fourth quarters most active pharmaceutical and biotech companies.
Activities of Note
- The financing environment improved dramatically in the life sciences industry during the fourth quarter of 2004. The industry raised $10.7 billion during the quarter, up dramatically from the $5.1 billion raised in the previous quarter. Driving the fourth quarter’s total was a fully revitalized environment for debt financing. Life sciences companies raised $5.9 billion through debt issues in the fourth quarter, up 250% from the $1.7 billion raised in the third quarter.
- The market for initial public offerings (IPOs) showed no signs of slowing down in the fourth quarter. An impressive 20 life sciences companies went public during the quarter. This total is the most witnessed by the industry since the life sciences IPO window opened during 2003. The net value of the fourth-quarter life sciences IPOs was $1.1 billion. International IPOs made a particularly strong showing, accounting for half (ten) of the fourth quarters IPOs, five of them issued on the Alternative Investment Market (AIM) of the London Stock Exchange.
- Life sciences securities performed well during the quarter, although not as well as the broader financial markets. The NASDAQ and the Dow finished the quarter up 13.9% and 7%, respectively. The S&P 500 matched that performance, gaining 8.2%. Biotechnology stocks nearly kept pace with the market. The NASDAQ Biotechnology Index ended the quarter up 7.1% while the Amex Biotechnology Index rose 3.1%. Pharmaceutical securities were a bit cooler during the quarter. The Amex Pharmaceutical Index rose only 2.5%, ending the year down 5.7%.
- Life sciences ownership changes took place at a typical rate during the fourth quarter. A total of 110 ownership changes worth $34.1 billion took place during the quarter, up from the previous quarter’s 100 changes, which totaled $11.8 billion. The fourth quarter’s total value was significantly influenced by Johnson & Johnson’s proposed $25.4 billion acquisition of Guidant.
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