A global study of 100 senior executives at life sciences companies by global law firm Reed Smith, in partnership with Mergermarket, reveals that 94 per cent are planning to make an acquisition in the next year.
A further 87 per cent are expecting these to be cross-border transactions.
The report, Life lines: Life sciences M&A and the rise of personalised medicine, explores the main drivers behind the pursuit of cross-border life sciences deals, the challenges faced in executing those deals, and how advances in personalised medicine may change the face of the industry.
The first six months of 2015 saw USD164.3 billion worth of deals in the life sciences sector – an increase of almost 53% on last year – while the second half of 2015 began with a burst of new transaction announcements. These included the Israeli company Teva Pharmaceutical’s USD40.5 billion purchase of the generics division of Allergan, a US-based pharma company – the largest deal announced so far in 2015.
James Wilkinson, Reed Smith corporate partner, London, says: “Most of what we see has a cross-border nature to it: companies striving for growth in a saturated marketplace are looking to develop their portfolios, diversify their products, move into new markets and restructure their businesses through divestments.”
Another trend identified in the survey is the growing role of personalised medicine in life science companies’ strategies. More than two-thirds (70%) of respondents cite businesses that have a focus on personalised medicine as an area where they will increasingly look to make acquisitions.
Despite a continued focus on the development of broad application pharmaceuticals, companies recognise that personalised medicine offers the promise of higher returns even though the patient population is much smaller. “The future of medicine is to have the right medicine for the right patient and the right dose at the right time,” says Carol Loepere, Reed Smith partner in Washington D.C. and chair of Reed Smith’s Life Sciences Health Industry Group.
Nick Cheek, global managing editor of Remark, the events and publications division of the Mergermarket Group, says: “The M&A boom in the life sciences sector looks set to continue. Deal volumes are on track to beat 2014, itself the busiest year for transactions since the financial crisis seven years ago. Despite considerable uncertainty, transactions will continue apace, as life sciences companies work out where the pieces will fall for their strategies – and seek to build organisations that are fit for this purpose.”
