Opinion: New Merger Enforcement Approach Jeopardizes Life Sciences Innovation in NJ

May 21, 2024 | Blog Post, PULSE Partner

How mergers and acquisitions drive innovative cures and New Jersey’s economy

New Jersey has long been home to some of the world’s leading research-based biopharmaceutical companies. Many have made New Jersey a base for their global, North American, or U.S. operations. Aside from their contributions to human health and patients worldwide, our state’s biopharmaceutical community is responsible for 16% of New Jersey’s Gross Domestic Product, contributing $120.9 billion in total impact to our state economy annually. These economic benefits manifest in our skilled workforce and robust job opportunities, directly and through our statewide supply chain, making New Jersey a life sciences leader on the global stage.

However, recent policy changes by the Federal Trade Commission and Department of Justice could jeopardize our state’s status as a health care leader.

Life sciences’ mission is saving and improving lives by bringing innovative medicines to patients. To do this efficiently and effectively, these innovator companies rely on a life sciences ecosystem in which companies of all sizes, expertise, resources and capabilities play a significant role in bringing new treatments to patients. Mergers and acquisitions have, for decades, played a vital role in facilitating the dynamic process that brings discoveries from the lab to patients.

America’s competition policy framework has historically supported this process. It has yielded a productive, sustainable stream of new therapies and advances while benefitting New Jersey’s workforce and economy by creating and supporting jobs in our state. Unfortunately, the FTC and DOJ have cast a dark cloud over this process.

The agencies recently issued new guidelines that outline an increasingly aggressive approach to merger enforcement, while departing from many decades of bipartisan competition policy. The new guidelines are effectively a menu of options that agencies can use to challenge mergers and acquisitions, including challenges based on even highly speculative impacts on competition. The FTC has also signaled imminent changes to the Hart-Scott-Rodino filing requirements, which stipulate the premerger waiting periods, notifications, and information disclosures that companies must abide by before a merger can be executed. The FTC’s proposed HSR rule changes – which are expected to be finalized imminently – could dramatically increase the time, costs and burden required of companies seeking to engage in M&A.

The FTC and DOJ are taking steps to weaken our thriving life sciences sector by introducing unnecessary risk to deals that are fundamental to having a productive life sciences ecosystem in New Jersey and across the country. The result: many small, emerging biopharma companies in New Jersey may no longer be able to pursue a mutually beneficial merger and acquisition agreement that ultimately brings new medicines to market.

Our state is a vibrant hub of life science and biopharma establishments, boasting the highest concentration of scientists and engineers per square mile in the U.S. and nearly 800 clinical trials in progress. The new merger and acquisition policies of the FTC and DOJ threaten to disrupt this thriving ecosystem.

We implore our federal representatives to recognize the potential damage these policies could inflict on New Jersey’s life sciences industry and to restore bipartisan balance to M&A enforcement in the life sciences. The future of our patients and our state’s economy depends on it.

Chrissy Buteas is president and chief executive officer of the HealthCare Institute of New Jersey.

This op-ed originally appeared on NJBiz.com.