Amidst greater market uncertainty and a severely constrained initial public offering (IPO) environment, mergers and acquisitions (M&A) are serving as a critical “life raft” for investment, innovation and growth in America’s life sciences industry, reports Axios’ Katherine Davis in her recent article, “Biotechs search for buyers as runways end.”
Faced with funding headwinds, early-stage and pre-profit life sciences companies are increasingly looking to pass the baton to larger, more established companies to advance new treatments and cures. “Executives and investors are growing increasingly desperate for exits,” notes Davis. “Amid the turbulence…VC [venture capital] investors are advising portfolio companies to look for M&A opportunities where they can.”
Indeed, pro-competitive M&A allows life sciences companies of all sizes to better manage the growing complexity of developing and delivering new medicines in several ways, including by:
- Ensuring a broad and efficient allocation of resources and investment across America’s life sciences industry. Pro-innovation M&A allows life sciences companies of all sizes to specialize in what they do best, and partner when it makes sense to combine complementary capabilities.
- Serving as a critical exit for investors, helping attract the funding needed to support early-stage discoveries. This funding is essential, particularly for the more than 80 percent of life sciences companies that operate without a profit as they work to develop new treatments and cures.
- Improving the odds of successfully bringing a new medicine from the lab to the patient. On average, bringing a new medicine to market takes over a decade, costs more than $2.6 billion and has a 90 percent failure rate. Few companies can complete this journey alone.
As Davis’ article underscores, M&A is a unique and fundamental component of America’s life sciences industry. To maintain America’s status as a global leader in life sciences innovation, policymakers must recognize this reality and support these pro-competitive partnerships.