At a time when the outlook is extremely optimistic, particularly with the growth of personalised medicine, the following factors are seen as crucial to M&A success
Recognise competition is fierce. The most attractive targets are seeing strong competition between rival suitors – with PE buyers also keen. Financial investors recognise the opportunity for returns based on a deep understanding or market niches.
Focus on cross-border deals. Global transactions are likely to continue considering that growth in their existing markets can be difficult for many companies. Looking overseas enables them to tap new markets and manage risk by outsourcing drug development.
Consider joint ventures. M&A deals have been popular but they’re not the only solutions, with partnerships and joint ventures also possible. These are good ways for companies to get to know each other and see if their working methods are compatible.
Acknowledge trends. Personalised medicine is clearly on the rise, offering benefits such as higher pricing, greater efficacy and improved compliance. However, broad indication drugs will continue to be the mainstay of portfolios for some time to come.
Believe in technology. Advances such as 3D printing are providing life sciences companies with new opportunities to grow their businesses. Added to this fact is that they have money on the balance sheet to put to use on behalf of shareholders.
Reshaped businesses. Maintaining a broad product portfolio across several sectors is challenging and companies will need to manage their M&A activity in this context. It’s likely that firms will reshape themselves according to their strategic priorities.