As the need for more effective and accessible obesity medicines grows, mergers and acquisitions (M&A) have emerged as a key strategy for life science companies of all sizes to accelerate innovation and competition to bring new treatment options to patients.
Obesity is a serious chronic disease that’s linked to other health conditions, making it one of the most pressing public health concerns in America. GLP-1 medicines have emerged as effective options for the treatment of obesity, and they are also showing promise in the future treatment of diseases such as Alzheimer’s, chronic kidney disease and sleep apnea.
Life sciences companies of all sizes are now competing to bring the next generation of obesity treatments to patients — exploring new mechanisms of action and aiming to improve the efficacy and tolerability for patients. M&A allows these cutting-edge companies of all sizes to specialize in what they do best — and partner where it makes sense — to advance new breakthroughs more effectively and efficiently.
As more companies enter the obesity treatment space, M&A is increasing competition and driving investment. Dozens of companies are now racing to deliver competing obesity treatments — a high-stakes endeavor when considering that 80 percent of life sciences companies operate without generating a profit. The promise of an eventual acquisition or partnership can often help early-stage companies attract the investment they need to innovate and compete.
Consider Viking Therapeutics, a California-based life sciences company working to advance a series of promising obesity medicines. As they seek to advance a new, competitive obesity treatment, the company has signaled an openness to a future merger or acquisition. In turn, investors have increasingly looked a future M&A deal as a key exit strategy and pathway which for the company to connect it’s promising innovations with the commercial capabilities of a larger, more established company.
By connecting smaller, discovery-stage companies with more established companies that have the infrastructure, expertise and capital to bring therapies to market, M&A accelerates the path from lab to patient. Carmot Therapeutics’ acquisition by Roche is another example, which helped connect the smaller company’s pipeline of investigational obesity treatments with the resources and infrastructure they need as they prepare to conduct large, late-stage clinical trials.
The obesity space shows us what’s possible when pro-innovation M&A is allowed to thrive: more ideas, more treatments, and more access for patients. However, recent policies threaten to undermine procompetitive life sciences M&A activity.
“New Hart-Scott-Rodino Act requirements now in effect will make the premerger filing process more burdensome and time-consuming. These rules require the evaluation of transaction rationale and competitive overlap, and may cause some M&A players to hesitate on certain transactions or decide not to move forward at all.”
– Byron Kalogerou and Meredith Cullen Schwartz, McDermott Will & Emery
If America is to continue leading the world in life sciences innovation, policymakers must recognize this reality, and support — not undermine — this critical pathway.