Big pharma and private equity seek biotechs in Europe’s east

In the race to supply vaccines to end the COVID-19 pandemic, U.S. drug developer Novavax turned to emerging Europe to speed up production with a pair of deals that endorsed a growing trend for consolidation in the region.

As part of a doubling in merger activity, buoyed by a combination of private equity and big pharma, Novavax bought the Praha Vaccines factory near Prague in a $167 million transaction last May. It followed up by partnering with Polish biotech company Mabion in March.

The pharmaceutical industry focused around Czech Republic, Hungary and Poland is dwarfed by that of nearby Germany, but industry insiders and analysts see scope for growth based on moderate costs and an expectation of higher healthcare spending, as well as a scientifically educated workforce.

Upstart biotech companies in Poland – eastern Europe’s biggest economy – are attractive targets, investors and companies say, and also ambitious to grow themselves.

Selvita based in Krakow, southern Poland, completed its first international acquisition in January with a $38 million deal for Croatian Fidelta – owned by Belgium’s Galapagos in January.

Although Selvita has drawn investor interest, it plans to remain a buyer rather than seller, executive vice president Milosz Gruca said.

He too predicted a combination of bigger drug companies and private funds would step up the pace of acquisitions of emerging companies.

“We have many new, young and successful innovative companies, which are shaping the new perspective for the CEE region and the way it is seen by investors,” Gruca told Reuters.

“Big pharma companies are interested in the programmes these smaller firms are bringing to the market. These companies will also be subject to potential acquisitions or partnering deals.”

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