M&A trends in life sciences and health care

Growth at the global intersection of change

Pharmaceutical firms, health care companies and other life science enterprises are increasingly expanding into new markets in their search for growth, driven by a combination of shrinking pipelines, more rigorous regulatory scrutiny, patent expirations, and competition from generic manufacturers. While high-profile M&A deals have grabbed headlines, some of the more subtle aspects of this expansion are less well understood.

The Economist Intelligence Unit, in collaboration with Deloitte Touche Tohmatsu Limited, surveyed 240+ senior life sciences and health care executives for their insights into the forces underlying the current M&A trends in the life sciences and health care industry.

Key findings

Anyone witnessing the feverish deal-making that has swept through the global life sciences and health care industry recently might well conclude that mergers-and-acquisitions (M&A) activity has become the dominant force shaping the industry. M&A is just one way forward as companies respond to changes in this dynamic and innovative space. This report, based on a March 2014 survey, reveals that partnerships and informal collaborations also form an important part of the picture as companies continue to grapple with a rapidly shifting landscape. A number of factors are driving changes in the life sciences sector—from financial pressures such as decreased reimbursement and consolidation to the expiration of patents, from the development of new drugs and treatments to health care reforms of various types. Demographic trends, such as aging global populations, are also driving change. In addition to M&A activity, companies are coping by encouraging organic growth, seeking collaborations within the industry and developing new business models. While M&A activity is on the rise, companies are being more deliberate, even cautious, when considering potential deals; they want to ensure that they’re the right deals to increase capabilities and expand their footprint. This appears to be especially the case for small and mid-sized firms across regions.

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