Pharma M&A

A Bitter Pill?

I wonder if a U.S. firm will want to buy it?
  • Why it matters

    Why it matters

    Baxter’s takeover of SuppreMol may damage the burgeoning biotech industry in Munich, Germany’s research and development hub.

  • Facts


    • Baxter announced it had bought the small biotech company SuppreMol for €200 million ($220 million).
    • Germany’s biopharmaceutical industry is worth about €5 billion.
    • More than $174 billion were spent on M&As in the pharma industry in 2013.
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The purchase yesterday of the German biotech firm SuppreMol by U.S. healthcare giant Baxter could lead to a biotech drain that will hurt the German economy, analysts have warned.

The U.S. firm announced yesterday that it had bought Munich-based SuppreMol for €200 million ($220 million). The acquisition gives Baxter access to SuppreMol’s entire portfolio, which includes promising drugs for the treatment of autoimmune diseases such as lupus and several allergic conditions.

The move comes just weeks after Gilead Sciences, the U.S.’s largest biotech firm, bought Phenex Pharmaceuticals, another small southern German biotech company. It also follows Amgen’s $1.2 billion purchase of Munich-based diagnostics firm Micromet.

Baxter, which is currently consolidating its $6 billion drug division ahead of a planned spin-off later this year, said it would continue to operate SuppreMol’s laboratories in Munich.

The city is home to large cluster of biotech firms, which in 2013 numbered 377 private businesses employing 23,000 and turning over €8.5 billion.

Overall, Germany’s biopharmaceutical industry is worth about €5 billion, and its entire pharmaceutical industry about €50 billion, making it the third largest in the world.

But the SuppreMol purchase could be a double-edged sword for the country, said Siegfried Bialojan, the head of Ernst and Young’s life sciences center in Mannheim. The danger is that the development of promising drugs is finalized and exploited in the buyer’s home country and not where the drug was originally discovered.

“We would prefer to see innovative products produced and developed in Germany,” said Mr. Bialojan. “There is a risk of a sell-out of assets and value creation from German research efforts abroad.”

But he added that if Baxter continued its investment in Germany, the purchase could benefit the burgeoning biotech sector.

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