European pharmaceutical companies ‘will continue merging’

Mergers within the pharmaceutical industry are expected to increase due to the strength of global sales and competition in drug development, according to a new report.

Standard and Poor’s argues that the largest European companies experienced “above-industry-average” increases in sales of approximately ten per cent during the first quarter of 2006, meaning the potential for acquisitions and mergers is growing.

Olaf Toelke, credit analyst at Standard & Poor’s, says that recent mergers have involved “formerly family-controlled midsize pharma businesses and could therefore partly reflect personal deliberations on tax and succession”.

The position of European pharmaceutical companies is expected to remain strong compared to other regions of the world due to “healthy product portfolios” combined with “undramatic patent expiry profiles”.

Sales of newly approved drugs in the US have benefited companies such as Roche, Novartis and GlaxoSmithKline, which each saw pharmaceutical sales increase by 18 per cent to 22 per cent as a result.

A recent merger worth $13 billion (seven billion pounds) between Germany-based chemical company Merck KGaA and Serono SA, a biotechnology company, was described as a “strategically compelling combination” by a Serono.

According to the Boston Globe, the deal is expected to provide Merck KGaA with a larger presence within the lucrative US market.