As small and mid-sized biotech companies are facing increasing funding pressures, life sciences mergers and acquisitions (M&A) have emerged as an increasingly important mechanism to sustain innovation and advance new therapies.
A recent analyst note highlighted that biotech funding is falling sharply amidst rising political and regulatory uncertainty in the life sciences industry. As more than 80 percent of life sciences companies operate without a profit, often relying on external capital to fuel early-stage research and development (R&D), this decline poses significant challenges for the development of new medicines.
Against this backdrop, pro-competitive M&A increases the odds that life sciences companies will be able to successfully bring a promising new discovery to patients — a journey which can take over a decade, cost billions, and has a 90 percent failure rate. Few companies are able to complete this journey alone. Rather, M&A allows companies of all sizes to specialize in what they do best, and partner to “pass the baton” and unlock the complementary strengths and capabilities needed to advance new therapies.
As an often-necessary milestone in an early-stage company’s journey to bring a new drug to patients, M&A also represents a clear and anticipated exit point for investors, helping companies to attract funding to support new breakthroughs. Amidst an increasingly cautious capital market, competition policies that support reliability and predictability for life sciences M&A are critical to help sustain investment in the next generation of treatments and cures.
M&A is a unique and fundamental component of America’s life sciences industry and helps to drive a world-class pipeline of groundbreaking medicines for patients in need. For the U.S. to maintain this global leadership in life sciences innovation, policymakers must prioritize competition policies that recognize this reality and support these pro-competitive partnerships.