"Part of this increase is driven by ultra-high-value deals: five of the six largest acquisitions in the last decade took place over 2017–19, and this will be analyzed later in the whitepaper. Additionally, assets have generally become more expensive over time, with larger market caps for discovery stage companies and greater premiums needed to acquire them. This inflation can be very clearly demonstrated by two deals: Forest Laboratories (now part of AbbVie) paid $1.1bn to acquire Clinical Data in 2011, just two weeks after it had gained approval for the novel antidepressant Viibryd (vilazodone), while Roche spent a similar amount of money ($1.4bn) in 2019 for the research-stage company Promedior, whose lead asset PRM-151 remains in Phase II development for idiopathic pulmonary fibrosis (IPF). While depression versus IPF is not an apples-to-apples comparison, clearly nowadays $1bn buys a lot less, and companies with programs that have cleared the final regulatory hurdles can now command much higher prices. "
" Although some high-value bolt-on acquisitions, such as Pharmasset and its hepatitis C portfolio ($11bn), have proven to be immensely successful, the sweet spot for bolt-on acquisitions is typically for companies valued at $1bn–$5bn. Companies in this price range – either with mid/late-stage clinical candidates or drug discovery platforms that have shown promise – are not guaranteed success, and the acquirers must therefore assume risk. One way of mitigating such risk is in completing multiple such transactions, thereby hedging against any single failure proving catastrophic."
