Katan Associates Study Shows Long-Awaited Life Sciences Roll-Up Will Continue, as Pharma and Larger Biotechs Hustle to Fill Dwindling Pipelines

LOS ANGELES--June 3, 2005--Katan Associates International

Asia and European Union will continue to be fertile breeding ground for M&A transactions
Biotech-driven acquisitions will remain at the forefront of deal activity

"Consolidation will continue among Pharma and Biotech in 2005, whether a true 'roll-up' occurs or not. This activity will be fueled by the need for Pharma to fill the pipeline and the need for Biotech to continue to gain critical mass," says Seth Yakatan, MBA, Partner, Katan Associates International. "While the United States has historically been the most active region for deals, Europe and Asia will provide fertile grounds for buyers, given value considerations and a strong lack of mezzanine and secondary capital providers in these markets."

According to Yakatan, there are more 2,000 Biotech companies in Europe and "not all of them are sustainable," he insists. "As many European venture capitalists seek portfolio optimization and liquidity events, merger-and-consolidation activities must occur in order to create more critical mass for exits and liquidity.

"An interesting phenomenon has occurred over the last decade among the larger Pharmaceutical companies and the assets with which they have undertaken merger-or-acquisition activity," explains Yakatan. "These transactions have not been classic 'roll-up' deals--as they have typically not utilized a tremendous amount of debt, and they have occurred more on an opportunistic or synergistic basis, rather than on a pure 'cash flow' basis. Nonetheless, this decade of activity has forced significant consolidation among industry players.

"We are left with several large pharmaceutical giants and a scarce number of comparable assets. As a result," says Yakatan, "the recent trend of large Pharma acquiring bigger Biotech is one which we will continue to see. We will also see more partnering as a means for Pharma to cheaply option interesting and earlier-stage technology. While deal values will remain steady, the number of deals done at the smaller end of the market will remain high. This activity will be fuelled by factors such as pressure for consolidation in the European Biotech sector and accelerated consolidation in emerging Asian markets. Already 2005 has experienced significant activity in the M&A sector, led by European and Asian players, and we fully expect this trend to continue and remain robust for the balance of the year," concludes Yakatan.

For a downloadable copy of Yakatan's Report--"Outlook for 2005 and Beyond: The Long-Awaited Life Sciences Roll-Up: Will We Have to Wait Another Year?--visit www.katanassociates.com.

Mr. Yakatan has experience as a corporate finance professional in the United States as well as experience in venture-capital investing as an analyst with Ventana Growth Funds and Sureste Venture Management. Most recently, Mr. Yakatan has worked with Union Bank of California, N.A., where he completed debt financing in excess of several billion dollars, while placing subordinated debt and private equity into several portfolio companies on behalf of the bank. Mr. Yakatan earned an MBA degree in Finance at the University of California/Irvine.

Katan Associates International (www.katanassociates.com) is a global advisory organization that provides capitalization strategies and a broad range of business consultancy services to life science enterprises. KAI has offices in Los Angeles, New York, Melbourne (Australia) and Tel Aviv (Israel).

Contacts: Katan Associates International, Seth Yakatan, 310-406-8236 BusinessWire.com