For over 150 years, Michigan has been at the forefront of bringing biopharmaceutical advances to patients across the country and around the world. This is not simply a byproduct of economic luck or chance, but rather the culmination of competitive mergers and acquisitions that elevated the state’s life science innovation on a global scale.
Take for example, Parke-Davis and Company, founded in Detroit in 1866, which built the first modern pharmaceutical laboratory and pioneered the first standardized, systematic method of clinically testing new drugs. In 1997, Parke-Davis also discovered Lipitor, a statin that reduces the risk of heart disease. Through a series of mergers and acquisitions, including a merger with Pfizer in 2000, the combined company’s infrastructure and global reach helped Lipitor become the most frequently used medicine worldwide.
Today, Michigan’s robust bioscience industry contributes more than $28 billion to the state’s economy and employs over 44,000 across 2,429 establishments. Together, these life science innovators have continuously worked to bring life-changing drugs to market for HIV/AIDS, cancer, epilepsy, Alzheimer’s and other serious diseases.
Unfortunately, recent aggressive policy shifts by the U.S. Federal Trade Commission (FTC) threaten to undermine Michigan’s life sciences ecosystem and its status as longstanding leader in pharmaceutical innovation.
Much of Michigan’s success in the life sciences is owed not just to the state-of-the-art institutions in our state, but also to the robust collaboration and partnerships between them. The complex science, significant regulatory requirements and logistical pressures of developing a new medicine demand tremendous expertise, capabilities, and experience. This process can rarely be navigated alone, particularly as most biopharmaceutical companies are small and 80% of them operate without a profit. Rather, life sciences companies must often rely on mergers and acquisitions (M&A) to combine the resources needed to bring a life-saving innovation to patients.
M&A plays a unique and critical role in advancing significant life science innovations, allowing companies to combine their complementary resources – promising fledging innovations and advanced global infrastructure networks – to bring treatments to market that otherwise might not succeed. In other words, M&A, which can include activities like partnership or licensing, provides a vital pathway to connect these treatments to the necessary tools needed to maximize the potential for success.
Recent M&A enforcement policies by the current FTC, however, ignore the important role and reality of M&A in life sciences innovation. The new premerger filing requirements finalized in mid-October shifted additional reporting burdens to companies seeking to engage in M&A, which create significant administrative costs and delays many early-stage companies cannot afford. Last year, the Agency’s 2023 merger guidelines introduced an aggressive approach to merger enforcement outlining their intent to challenge M&A deals on merely speculative or theoretical impacts on competition. These policies represent a significant departure from the historically bipartisan approach the FTC has taken to M&A enforcement and could affect Michigan’s capacity to innovate.
The impact of the FTC’s approach could be calamitous for Michigan and patients across the country. The hundreds of bioscience establishments which call Michigan home will find it much more difficult to take the next step in advancing new innovations, jeopardizing the billions of dollars and thousands of local jobs that these companies contribute to our economy each year. Most importantly, however, the FTC’s approach also risks obstructing groundbreaking new therapies from reaching the patients who need them – both here in Michigan and beyond.