It’s boom time in the life  sciences world with the industry having enjoyed an explosion in merger and  acquisition activity

The first six months of 2015 saw an incredible $164.3bn worth of deals – an increase of more than 50% on the $107.5bn over the same period last year. Meanwhile, the year ended with the megadeal of all megadeals as US drug giants Pfizer bought Ireland-based Allergan for US$160bn.

The increased activity is being attributed to factors such as acquisitions being the preferred way to grow and relaxed monetary policy in Western markets making capital less costly.

According to James Wilkinson, Reed Smith corporate partner in London, companies are striving for growth in a saturated marketplace. “They are looking to develop their portfolios, diversify their products, move into new markets, and restructure their businesses through divestments,” he said.

However, life sciences businesses are facing a number of challenges, including the highly competitive nature of the sector, the uncertain outlook, and lack of investor interest.

They are also confronting difficulties that threaten their growth strategies, such as finding the right alliances, changes in healthcare policy, and a difficult fundraising environment.

Such challenges must be overcome, according to Carol Loepere, Reed Smith partner in Washington D.C. and chair of the company’s Life Sciences Health Industry Group. “The trend that we’re seeing is for collaborations where there may be a long-term licensing or a co-promote agreement which may lead to an acquisition,” she said. “The collaboration model is a very promising one – for cross-border acquisitions and for developing in a particular market.”