Competition policies that support pro-competitive mergers and acquisitions (M&A) are critical to fueling innovation, competition and growth in America’s life sciences industry. Importantly, M&A has a quantifiable impact for the ecosystem and for the thousands of companies bringing new treatments and cures to market. Here’s the breakdown:
Life Sciences M&A Fuels Early-Stage Biopharmaceutical Breakthroughs
- Two-thirds of medicines eventually approved by the FDA originate from small, early-stage companies, which often rely on M&A to access the infrastructure and capabilities required to bring them to patients at scale.
- 80 percent of life sciences companies operate without a profit and often count on the prospect of future M&A to be able to attract outside investment.
- It costs $2.6 billion and takes 10-15 years, on average, to bring a new treatment or cure to market –– a journey that most pre-profit companies cannot complete alone.
Recent FTC & DOJ Policies Have Risked Chilling Pro-Competitive Life Sciences M&A
Unfortunately, recent policy shifts from the Federal Trade Commission (FTC) have risked needlessly obstructing pro-competitive life sciences M&A. For example, the FTC’s newly finalized Hart-Scott-Rodino (HSR) premerger notification rule dramatically increased the information that merging companies are required to provide the federal government, creating a significant regulatory burden that risks broadly deterring proposed mergers –– regardless of their likely impact on competition.
- The new HSR rule nearly triples the average time and cost burden of required merger filings and more than quadruples it for nearly half of M&A deals, according to the FTC’s own estimates.
- 98 percent of mergers and acquisitions raise no competitive concern but are nonetheless subject to the full burden of the new HSR rule.
Life sciences M&A is fundamentally about improving a company’s chances of successfully bringing a new treatment or cure to patients. For America to maintain its role as a global leader in life sciences innovation, policymakers must recognize and support the dynamic ecosystem supporting it and avoid unnecessarily obstructing or discouraging pro-competitive partnerships.