pwc pharma life sciences deals insights q3 2013

8/10/2019 Pwc Pharma Life Sciences Deals Insights q3 2013

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Pharmaceutical andLife Sciences DealsInsights QuarterlyQ3 2013

November 2013

A publication from PwCs

Deals business

At a glance

Deal value and volume

in the third quarter of

2013 increased relative

to the second quarter and

approached the levels of the

third quarter of 2012.

While economic and

industry trends are

combining in Russia to

create opportunities for

investment, considerable

challenges and risks remain.

Non-traditional

consideration, including

earn-outs, seller fnancing,

and structured transactions,

remains prominent in the

pharmaceutical and life

sciences industry. This

quarter, we highlight

trends and discuss practical

considerations in dealstructuring.


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PLS Deals Insights Quarterly 1

This issue ofPharmaceutical and Life Sciences Deals Insights Quarterlybrings you PwCs

perspective on deal activity in the industry. Each quarterly publication featuresthree sections:

1.Market update:A summary of M&A deals and trends for the previous quarter. This issuecovers Q3 2013.

2. Country spotlight:An update on doing deals in selected geographies. This issue focuseson Russia. While traditionally known for its natural resources, Russia has begun to shiftits focus to more effectively integrate into global trade and investment transactions anddevelop its market economy. This trend has given rise to opportunities for investmentamong pharmaceutical and life sciences companies. However, investors should bemindful of the risks and challenges that remain when entering this emerging market.

3. Strategy corner:A feature offering tips and insight on different aspects of deal making.Deal makers in the pharmaceutical and life sciences industry commonly rely on forms of

non-traditional consideration to reconcile differences in value. We discuss recenttrends in the use of earn-outs, seller nancing, and structured transactions and spotlightpractical considerations.

Refer to our prior publications to gain insights into doing deals in other geographic markets

and to learn the aspects of successful transactions. All of our quarterly deals publicationsare available at www.pwc.com/us/deals.

Welcome to PwCs Pharmaceutical andLife Sciences Deals Insights Quarterly

Q4:2012Doing deals in ChinaDriving divestiture success

Five critical components

Q1:2013Southeast Asia comes of ageRening the price-value

equation

Q2:2013Brazil: High growth potentialbut challenges to deal making

Foreign Corrupt Practices Act


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2 PwC

Market updateDeal volume and value increased in the third quarter whilefundamentals and pending deals point to potential for heightenedactivity in the fourth quarter of 2013

Total deal volume increased approximately 10% during the

third quarter of 2013 in comparison with the secondquarter of 2013, while declining by approximately the sameamount relative to the third quarter of 2012. Deal valueincreased by nearly 50% over the previous quarter whiledeclining approximately 15% relative to the third quarter of2012. The increase in the third quarter owes primarily totwo large transactions in the medical device segment.

While the fundamentals for M&A activity remain strong inthe pharmaceutical and life sciences (PLS) industry, thedeal market may continue to face challenges due to thescarcity of assets available for sale and heightened focusfrom buyers seeking to increase the likelihood of deal

success. While these factors are driving valuations and dealtimelines, several large transactions announced in the thirdquarter indicate buyers remain active in the market and areseeking opportunities for growth through acquisition.

Figure 3: Total deal value and deal volume by industry segment(2012 Q3)

Deal value ($B)

Source: Thomson Reuters

Services

Diagnostics

Medical devices

Biotechnology

Pharmaceuticals

0 2 4 6 8 10 12

8

4

1

7

7

Figure 2: Total deal value and deal volume by industry segment(2013 Q2)

Deal value ($B)


0

0 2 4 6 8 10 12 14

Services

Diagnostics

Medical devices

Biotechnology

Pharmaceuticals 13

2

6

2

Figure 1: Total deal value and deal volume by industry segment

(2013 Q3)

Deal value ($B)


Services

Diagnostics

Medical devices

Biotechnology

Pharmaceuticals

0 2 4 6 8 10 12 14 16

0

4

13

7

1

Note to Figures 1, 2, and 3: Numbers within bars indicate number of deals during the quarter.


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Quarter in review

The volume of PLS deals closed during the third quarter of2013 increased 8.7% compared with the second quarter of2013, but decreased 7.4% relative to the third quarter of2012. The value of PLS deals closed during the third quarterof 2013 increased 50% relative to the previous quarter anddecreased 16% relative to the third quarter of 2012. On ayear to date basis, deal volume in 2013 is consistent with2012, while deal values across the PLS industry havedecreased from $60.2 billion to $37.6 billion. Unlessotherwise noted, gures used for comparative purposesexclude mega deals with values in excess of $20 billion.

Deal value in the pharmaceutical and biotechnologysegments decreased sharply relative to levels for the secondquarter of 2013 and third quarter of 2012, while dealvolume trends offer mixed indications. The number ofpharmaceutical deals decreased signicantly relative to thesecond quarter. Volumes were consistent with the thirdquarter of 2012. Similarly, while the number ofbiotechnology deals doubled relative to the second quarterof 2013, only four transactions closed, representing a 43%decline from the third quarter of 2012.

Deal activity in the medical device sector was a bright spotwithin the industry, with deal volume more than doublingrelative to the second quarter of 2013 and value increasingseveral-fold relative to the second quarter of 2013 and thethird quarter of 2012. These results are in part due to thecompletion of the acquisitions of Gambro AB by Baxter for$4 billion and Bausch & Lomb by Valeant for $8.7 billion,inclusive of debt assumed, and other cash adjustments.However, excluding these larger transactions, the sectorposted a minor decline in deal value compared to the priorquarter and nearly 110% growth relative to the third quarterof 2012.

0 10 20 30 40 70 80

2012 Q3

2012 Q4

2013 Q1

2013 Q2

2013 Q3

Figure 4: Total deal value (2012 Q32013 Q3)

Deal value ($B)

22

18

12

76

18


Figure 5: Total deal volume (2012 Q32013 Q3)

Number of deals

0 10 20 30 40 50

2012 Q3

2012 Q4

2013 Q1

2013 Q2

2013 Q3

27

43

23

35

25



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While third-quarter results suggest mixed results in dealactivity among industry sectors, the fundamentals forM&A activity remain in place, including strong equitymarkets, healthy balance sheets, and access to capital.Further, several large transactions were announced in thethird quarter and are expected to close in the fourthquarter or early 2014. These transactions indicate thatacquirers remain active in the market and deal activitywill likely continue to increase in the coming quarters.However, a relative scarcity of quality assets available forsale and a heightened focus by potential acquirers on

successful execution may hinder deal activity.

Industry participants continue to evaluate their productportfolios and seek opportunities to unlock value throughdivestitures. At the end of the third quarter, there were 11pending divestitures with deal values announced. Thesedeals ranged from $20 million to $1.9 billion, with anaverage value of approximately $575 million. Givencurrent trends, divestitures are expected to remain asignicant component of deal-making activity andcontinue to drive interest among both strategic andnancial acquirers.

Consistent with recent quarters, while strategic buyers

continue to drive the majority of M&A activity in the PLSindustry, nancial buyers have remained competitive inacquisition processes and were successful in severalannounced and closed transactions in the third quarter.Further, the high-yield debt market showed strength latein the third quarter as issuers sought to raise capital inanticipation of continued rising interest rates. We expectnancial sponsors to remain active in transactions in thePLS industry.

Trends and insights

0 10 20 30 40 70 80

2012 Q3

2012 Q4

2013 Q1

2013 Q2

2013 Q3

Figure 6: Total deal value by industry segment (2012 Q32013 Q3)

Pharmaceuticals

Biotechnology

Medical devices

Diagnostics

Services


Deal value ($B)

71

72

8 2 1

2

15

4

3

11

12

5

2 3

21

1

1

1

2

1

Figure 7: Total deal volume by industry segment (2012 Q32013 Q3)

Pharmaceuticals

Biotechnology

Medical devices

Diagnostics

Services


Number of deals

0 10 20 30 40 50

2012 Q3

2012 Q4

2013 Q1

2013 Q2

2013 Q3

6

16 7 9

13 2 2

3

8 4 17 7

17 6 16 3

7 4 13

1

1


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PLS stocks continued to perform well relative to theoverall market in the third quarter of 2013. The S&Phealthcare sector index rose by approximately 8.7%,compared with a 6% increase for the S&P 500. Thesegains were driven primarily by continued improvementamong biotechnology companies, which appreciated38.1%, as measured by the S&P 500 biotechnology index.Among other sectors, the healthcare equipment andsupplies sector increased 1.5%, while the pharmaceuticalsector increased 4.1%. On a year-to-date basis, the S&Phealthcare sector index has increased 30.6% relative to20.3% for the S&P 500.

Figure 8: Equity Index Returns

0%

20%

40%

60%

80%

100%

120%

Sep-30Jun-28Mar-28Dec-31Sep-28Jun-29Mar-30Dec-30

S&P 500Healthcare Sector Index

S&P 500Biotechnology Index

S&P 500Health Care Equipment & Supplies Index

S&P 500Pharmaceuticals Index

S&P 500 Index

Source: S&P CapitalQ

2011 2012 2013

The capital markets continued to demonstrate strongmomentum in the third quarter of 2013 as the volume ofnew public listings matched the previous quarter andexceeded the third quarter of 2012, according to IPOWatch, a quarterly survey of IPOs listed on US stockexchanges by PwC.1Overall IPO volume for the rst ninemonths of 2013 surpassed overall volume for all of 2012,while the high yield market saw $255 billion of issuances,exceeding 2012 issuances through three quarters. Therewere a total of 63 IPOs in the third quarter of 2013. Thislevel was consistent with the second quarter of 2013while representing a 110% increase, compared with 30listings in the third quarter of 2012. The rst nine monthsof 2013 recorded 160 IPOs, surpassing the 108 IPOs in thecomparable period last year, and the 146 IPOs for all of2012. The healthcare sector was home to 18 IPOs in thethird quarter of 2013, raising $3 billion. Current trendssuggest this momentum will continue through the end ofthe year.

Despite continued pressure on startups seeking to raisecapital, US venture capital funding for the biotechnologyand medical devices sectors improved dramatically in thesecond quarter of 2013 according to the MoneyTree

Report from PwC and the National Venture CapitalAssociation (NVCA).2The biotechnology industry was thesecond-largest industry in terms of dollars invested, with$1.3 billion going into 103 deals, increasing 41% indollars and 4% in deals from the prior quarter. Themedical device industry received $543 million in 71deals, representing a 1% decline in both dollars and dealsfrom the prior quarter. For all sectors, venture capitalistsinvested $6.7 billion in 913 deals in Q2 2013, an increaseof 12% in dollars invested and an increase of 2% in thenumber of deals from the rst quarter of 2013, when $6billion was invested in 896 deals. However, this was adecline of 9% in dollars and 6% in number of deals yearover year.

1 http://www.pwc.com/us/en/press-releases/2013/q3-2013-ipo-watch-press-release.jhtml

2 http://www.pwc.com/en_US/us/health-industries/publications/assets/pwc-biotech-boost.pdf


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About the data

We dene M&A activity as mergers and acquisitions inwhich targets are US-based companies acquired by eitherUS or foreign buyers or foreign targets acquired by USpharmaceutical and life science companies. We denedivestitures as the sale of a portion of a company (not awhole entity) by a US-based seller.

We have based our ndings on data provided by industry-recognized sources. Specically, values and volumes usedthroughout this report are based on completion-date datafor transactions with a disclosed deal value greater than $15million, as provided by Thomson Reuters as of September30, 2013, and supplemented by additional independentresearch. Information related to previous periods is updatedperiodically based on new data collected by Thomson

Reuters for deals closed during previous periods but notreected in previous data sets.

Deal information was sourced from Thomson Reuters andincludes deals for which buyers or targets fall into one of thefollowing industry sectors: biotechnology, medical devices,medical diagnostics, pharmaceuticals, or services (i.e.,contract research organizations). Certain adjustments havebeen made to the information to exclude transactions thatare not specic to the PLS industry. Capital market andequity return information is sourced from S&P Capital IQ.

On July 30, Cubist Pharmaceuticals agreed to acquirethe entire share capital of Optimer Pharmaceuticals for$10.75 in cash and up to $5.00 per share in contingentvalue rights, or a total value of $775.5 million.

On September 5, Otsuka Holdings of Japan agreed toacquire Astex Pharmaceuticals for $8.50 in cash pershare, or a total value of $886.9 million.

On September 27, a subsidiary of Kohlberg KravisRoberts & Co agreed to acquire an 80% interest inPanasonic Healthcare Co., Ltd., a Tokyo-basedmanufacturer of medical equipment, for approximately$1.7 billion in cash. Panasonic Corporation will retainthe remaining 20% interest in Panasonic Healthcare.

On September 25, Stryker Corporation agreed toacquire the shares of Mako Surgical Corporation for $30per share at $1.65 billion. Mako develops systems forrobotic-assisted surgery in orthopedic procedures.

Market wrap-up

Fundamentals for deal making remain strong among PLScompanies, and transactions announced in prior quarterssuggest a heightened level of activity in the fourth quarterand early 2014. Healthy balance sheets, access to nancing,and strong equity markets will allow PLS participants tocontinue to seek opportunities to grow through acquisition.


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Country spotlightRussia: poised for continued economic changebut challenges remain

Russia, boasting the worlds largest land mass at 6.5 millionsquare miles and a population of 143 million, has begun to

shift from an internal focus on its own natural resources andreliance on old institutions and practices to an effort tomore effectively integrate into global trade and investmenttransactions and develop its market economy.

Rebounding from the global economic crisis, analystsincreasingly see Russia as an emerging market moving inthe direction of greater globalization.Russia joined theWorld Trade Organization in 2011 after a nearly two-decadeeffort to do so. While such changes portend an economybecoming more welcoming to business, in 2013, the WorldBank ranked Russia as 112 out of 185 economies for easeof doing business.

To be sure, entering the Russian market can be challengingfor outsiders. But several factors make the region attractiveto investors:

With Europe to the west and Asia to the east, Russiaserves as a ground transportation link among its 14bordering neighbors.

Three-quarters of Russias people live in cities, towns,and urban centers.

More than 99% of Russias population is literate, andwomen are well represented in the workforce.

The education system, which replicates majorcomponents of the old Soviet system, is capable ofcreating world-class specialists in exact sciences such asmathematics, physics, chemistry, biology, engineering,and the like.

Several universities have introduced high-poweredsocioeconomic science programs, which may drive atalent pipeline for elds such as economics,management, law, politics, and sociology.

Russia is poised to spur and support innovation, which maybe crucial to boosting entrepreneurship, venture capital,and the countrys future viability as a more developed,robust market.

Ambitious goals for pharmaceuticals

Russias aging population and increasing GDP, among othermacroeconomic factors, are driving a dramatic change inthe countrys pharmaceutical and life sciences market.Regulatory changes and government promotion of theindustry are part of the countrys broader efforts to promotebetter health for its people.

As part of that initiative, the government has establishedaggressive goals for the pharmaceutical industry, promotinglocal, high-quality production of medicines, along withmajor research and development programs.

As a result of these efforts, the government aims for 50% ofthe medicines used in Russia to be produced within thecountry by 2020. Simultaneously, pharmaceutical exportsare expected to increase eight-fold.

To meet those goals, new regulations have been enacted todrive production capability, including a federal law, On theCirculation of Pharmaceuticals, which went into effect in

September 2010. This law aims to:

Ease administrative barriers to bringing medicines tothe domestic pharmaceutical market.

Support the Russian pharmaceutical industry andintroduce innovations in the production ofpharmaceuticals.

Integrate Russian legal regulations with internationalprinciples and standards adopted with respect to thecirculation of pharmaceuticals.

As the countrys governmental authorities,

business leaders, workers, and consumers worktogether to further enhance the maturity level ofRussias institutions, infrastructure, and safeguardsin line with ever-escalating global standards andexpectations, investors should equip themselves toboth understand the new market opportunities thatmay arise and counter the ill effects associated withthis nascent giants evolution. They should seek tounravel Russias changing economic landscape,better understand the dimensions and attributes ofthe markets r isks, and plan accordingly. Inevitably,this means remaining committed to robust duediligence and anti-corruption programs.

PwC, Marketmap: The Russian evolution: How canforeign businesses prepare to prosper? 2013 Issue 3,


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Russia has also begun to implement stronger regulatory andcompliance measures, including limiting medicalrepresentatives access to physicians.

Growth opportunities and risks

Russias growth is projected to slow to 1.8% in 2013, downfrom 3.4% the previous year, but it is expected to increase to3.1% in 2014, according to the World Bank.1In 2010,Russias annual ow of Foreign Direct Investment (FDI)began a period of rapid acceleration, although cumulativeFDI in Russia remains comparatively low. Indeed FDIinows to Russia have increased dramatically in the lastdecade, from nearly $8 billion in 2003 to more than$51 billion in 2012.2

Business leaders around the world have begun to pay

attention, ranking Russia among the top ten countriesfor growth prospectswith one-third of those surveyedplanning to invest in Russia, according to PwCs 15th AnnualGlobal CEO Survey.

While the opportunities for investment in Russia areattractive, many investors are also aware of the marketsmost persistent challenges, including:

1 http://www.worldbank.org/en/news/feature/2013/10/01/russia-economic-update

2 http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?order=wbapi_data_value_2012+wbapi_data_value+wbapi_data_value-last&sort=asc

Administrative bureaucracy a regulatoryenvironment lacking in legal safeguards and prone to

high levels of bureaucracy and corruption, accordingto PwCs Doing business and investing in the Russianfederation (2010); a relatively new tax system; and ajudiciary that is not independent.

Property rights risk routine copyright infringement,with computer software and electronic media the mostpopular targets, and sophisticated, ongoing efforts atintellectual property theft.

Supply chains strained by geographies andinfrastructure a complex and fragmented supplychain, compounded by the countrys sheer size and

geographical diversity. Further, energy grids,telecommunications, and other infrastructure dontalways meet increasing market requirements.

Development that varies by region, economicsegment, and institution a reality requiringinvestors to understand how location and localtraditions and culture can affect business practices andprotocols.

Corruption risk While Russias new corporateleaders are beginning to address compliance functions,which historically have been less than robust, investorsnevertheless should remain wary of corrupt inuences.Further, Russias business practices rely heavily onintermediaries, including agents and joint venturepartners, which can complicate due diligence processesand increase opportunities for corruption.

Conclusion

Russias large and complex market offers attractive growthand investment opportunities for global and domesticpharmaceutical and healthcare companies. In order to takeadvantage of those opportunities, however, companies mustaddress regulatory challenges and other longstanding

obstacles stemming from traditionalism and corruption.Interactions with wholesalers, government, pharmacists,and doctors can be challenging to navigate. But the upside long-term, substantial economic opportunities appears to be worth the challenges.

For a more in-depth discussion of the economy and market inRussia, please refer to our publication, Marketmap, TheRussian evolution: How can foreign businesses prepare toprosper? PwC 2013. http://www.pwc.com/us/en/forensic-services/publications/marketmap-russia.jhtml

$0M

$16M

$32M

$48M

$64M

$80M

2012201120102009200820072006200520042003

Figure 10. Foreign direct investment in Russia ($B)and GDP growth (%) (2003-2012)

Foreign Direct Investment ($B)

GDP Growth (%)

-9.0%

-7.2%

-5.4%

-3.6%

-1.8%

0.0%

1.8%

3.6%

5.4%

7.2%

9.0%

Source: The World Bank

ForeignDirectInvestment($B)

GDPGrowth(%)


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10 PwC

A poorly crafted earn-out or deal structure, for example,may cause management to boost short-term performance atthe expense of long-term results, or it may not adequatelyaddress the specic risk from which the difference in valuearises.

Case study: Contingent consideration

Contingent consideration remains a common tool for dealmakers seeking to bridge value gaps. Contingentconsideration provides for future payments between thebuyer and the seller, based on the target company achievingmeasurable performance milestones. These measurableperformance milestones can be nancial, such as revenue orEBITDA targets, or non-nancial, such as regulatory

approval. In recent years, contingent value rights, or CVRs,have also gained popularity, particularly among PLS rms.CVRs often trade as listed securities that provide sellingshareholders with both the ability to participate in thefuture upside of a company and near-term liquidity.

The graph on the next page presents data from S&P CapitalIQ for acquisitions by PLS companies for the years 2008through 2012, and for 2013 through September 30.1Thisdata suggests a signicant increase in the frequency andvalue of contingent consideration offered in transactions.The value of contingent consideration offered across alldeals represented 3% of total consideration in 2008 and

increased to 10% in 2012. Several signicant transactionscaused this percentage to rise further, to 17%, in 2013.Similarly, from 2008 through September 30, 2013, thenumber of deals in which contingent consideration wasoffered increased from 27% to 35%, peaking in 2012 at38%. Among deals in which contingent consideration wasexchanged, the portion represented by contingentconsideration increased from 36% in 2008 to 52% through2012 and in the nine months ended September 30, 2013.

1 Source: S&P Capital IQ. Includes transactions in the following sub-

industry classifications: healthcare technology, healthcare equipment andsupplies, biotechnology, life sciences tools and services, andpharmaceuticals.

Reconciling differences in value between buyer and seller isthe art of the deal in any industry. But it is particularlychallenging in the pharmaceutical and life sciences industrybecause of the uncertainty and range of potential outcomesfor products. In order to bridge the value gap, buyers andsellers have increasingly employed a variety of alternativedeal structures, including seller nancing, contingentconsideration, and other transaction forms such asstructured payments, royalty arrangements, and jointventures.

These deal structures provide a variety of benets to buyersas well as sellers. Buyers are able to gain access to a marketor product category while mitigating some of the riskassociated with the initial investment and managing cashow. Sellers are able to bring in new capital or realize someliquidity while oftentimes remaining involved in thebusiness and retaining a portion of the upside of thetransaction.

Regardless of the specics of the arrangement, transactionstructuring requires careful consideration of several factorsto facilitate alignment of objectives and preservation ofvalue, while also avoiding unforeseen consequences.

Strategy cornerUsing non-traditional consideration to close the M&A value gap

Keys to establishing earn-outs

What is the benchmark?

How is the consideration paid?

How is performance measured?

How is the payment calculated?

Over what period of time is the earn-outapplicable?

Who will run the business/operations?


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Critical success factors in deal structuring

Measurement of impact on deal value

Measurement of contingent variables post-transaction

Impact on post-deal integration

Financial reporting and tax consequences

In focus: pharmaceutical and life sciences industry

The increased reliance on contingent consideration

corresponds with a period of relatively high risk anduncertainty due to the economic crisis that began in 2008,as well as the uncertainty within the PLS industryspecically as a result of the Patient Protection andAffordable Care Act.

Transactions involving contingent consideration also requirecareful consideration of the accounting and tax issues. Forexample, contingent consideration related to theemployment of a seller may be accounted for ascompensation, rather than purchase price. Otherwise,contingent consideration exchanged in a businesscombination is recorded at fair value as of the acquisition

date, which may require relatively complex valuationtechniques and models and may be classied as a liability orequity. Further, liability-classied contingent considerationis required to be re-measured at fair value in subsequentperiods. Tax considerations may also play a role in dealstructuring, particularly in the case of a closed transaction,when a tax liability is recognized by the seller at a differenttime than when the contingency is settled.

Figure 11: Percentage of deals with contingent consideration and

contingent consideration as a percentage of deal value

(January 1, 2008 through September 30, 2013)

0%

10%

20%

30%

40%

50%

60%

201320122011201020092008

% of deals with contingent consideration

Deals with CCCC as a % of deal value

All dealsCC as a % of total deal value

Source: S&P Captial IQ

Alternative deal structures

Seller nancing and step, or phased, acquisitions are twoadditional structuring mechanisms frequently employed inthe PLS industry.

Seller nancing is another means for the seller to retainan economic stake in the divested business. It can comein the form of plain-vanilla debt or more complexinstruments, such as convertible preferred stock. Theform and the amount of seller nancing depends on,among other factors, the nature of the transaction andthe amount of risk and/or potential upside the sellerwishes to retain.

Step acquisitions provide an alternative approach toseller nancing. For example, the acquirer may pur-chase 80% of a target common stock and concurrentlyreceive a call option from, and writes a put option to,the selling shareholders for the remaining 20%. Thesetransaction structures provide an incentive for theformer owners to contribute to the success of thebusiness post-transaction while providing exibility tomatch the objectives of the buyer and seller. However,these structures also bring considerable tax andaccounting complexities and may have signicantnancial statement impacts.

ConclusionDue to the uncertainty and risks inherent in transactions inthe PLS industry, buyers and sellers will likely continue torely upon various forms of non-traditional consideration tobridge gaps in value. Deal makers who carefully evaluatepotential deal structures and align the incentives of buyersand sellers will be more likely to achieve deal success.


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About PwCs Deals Practice

Our deals professionals help clients understand the risks intransactions, so they can be condent they are makinginformed strategic decisions. From their deal negotiations tocapturing synergies during integration, we help clients gainvalue and, ultimately, deliver this value to stakeholders. Forcompanies in distressed situations, we advise on crisisavoidance, nancial and operational restructuring, andbankruptcy.

PwCs Deals practice can advise pharmaceutical and lifescience companies and PLS-focused private equity rms onM&A decisions, from identifying acquisition or divestiturecandidates and performing detailed buy-side diligence,through developing strategies for capturing post-deal prots,to exiting a deal through a sale, carve-out, or IPO. With more

than 9,800 deals professionals in 75 countries, we candeploy seasoned deals teams that combine deeppharmaceutical and life sciences industry skills with localmarket knowledge virtually anywhere and everywhere yourcompany operates or executes transactions.

Although every deal is unique, most will benet from thebroad experience we bring to delivering strategic M&Aadvice, due diligence, transaction structuring, M&A tax,merger integration, valuation, and post-deal services. Inshort, we offer integrated solutions tailored to yourparticular deal situation and designed to help you completeand extract peak value within your risk prole, whether yourfocus is deploying capital through an acquisition or jointventure, raising capital through an IPO or private placementor harvesting an investment through the divestiture process.

For more information about M&A and related services in thepharmaceutical and life sciences industry, please visit www.pwc.com/us/pharmadeals, www.pwc.com/us/pharma orwww.pwc.com/us/medtech.

For views on the Health Industries Sector, refer to the USHealth Services Deals Insights reports on the Deals section ofour website.


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Dimitri DronePartner, DealsDeals Services Pharmaceutical& Life Sciences Leader973 236 [email protected]

James WoodsDirector, Deals617 530 [email protected]

Strategy cornerUsing non-traditionalconsideration to close the M&A value gap

Matthew SabatiniPartner, Capital Markets andAccounting Advisory Services646 471 [email protected]

Country spotlightRussia: poised for continuedeconomic change but challenges remain

Harry G. BroadmanLeader, Emerging Markets Strategy Consulting,and Chief Economist202 312 0807

[email protected]

For a deeper discussion on pharmaceutical andlife sciences deal considerations, please contactone of our practice leaders or your local Deals partner:

Martyn CurraghPrincipal, US Practice Leader, Deals646 471 [email protected]

Northeast

Tom PickettePartner, Deals617 530 6343

[email protected]

New York Metro

Glenn HunzingerPartner, Deals646 471 [email protected]

Colin WittmerPartner, Deals646 471 [email protected]

Central

Manoj MahenthiranPartner, Deals312 298 [email protected]

Pam YanakopulosPartner, Deals312 298 [email protected]

West

Mattias Gunnarsson

Partner, Deals213 356 [email protected]

Acknowledgments

Authors


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www.pwc.com/us/pharmadeals

2013 PwC. All rights reserved. PwC and PwC US refer to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopersInternational Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultationwith professional advisors. ST-14-0014

pwc pharma life sciences deals insights q3 2013

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