Following a recent Trump Administration executive order, the Federal Trade Commission (FTC) and Department of Justice (DOJ) both released statements signaling a shift to a more balanced approach to mergers and acquisitions (M&A) enforcement. Indeed, a balanced approach is critical for America’s life sciences industry, where M&A is fundamental to innovation, competition and growth.
America’s leadership in the life sciences is supported by unique and highly successful market incentives that enable companies of all sizes to specialize in what they do best, and partner through M&A as a natural – and often expected – step towards bringing new medical breakthroughs to patients. These are some of the reasons why competition policy cannot overlook the importance of such pro-competitive life sciences M&A:
1. Life Sciences M&A Fuels Investment in Early-Stage Innovation
The potential for a merger or acquisition often represents a key exit point for investors, allowing early-stage companies to secure the funding they need to support initial discoveries and, ultimately, connect these discoveries with the capabilities to be able to bring them to patients. More than 80 percent of life sciences companies operate without a profit and, particularly in an increasingly challenging funding environment, M&A acts as a critical upstream incentive for investment and downstream pathway for companies to bring a breakthrough to patients.
2. Life Sciences M&A Supports American Leadership in Biopharmaceutical Innovation
The United States has built its leadership in life sciences on decades of balanced competition policies that fuel innovation, support millions of good jobs, and strengthen the economy. To sustain that leadership, policymakers must remove unnecessary barriers to collaboration and ensure life sciences companies can engage in pro-competitive partnerships for the benefit of patients.
3. Life Sciences M&A Allows Companies of All Sizes to Bring New Therapies to Patients
Developing a new medicine can take over a decade, cost billions, and has a 90 percent failure rate. M&A allows highly specialized companies to partner and “pass the baton,” connecting therapies with the right resources, at the right time, to bring them to patients. Moving toward more balanced enforcement policies can help remove unnecessary barriers to these partnerships and ensure that lifesaving treatments and cures reach patients faster.
As PULSE recently highlighted in letters to the Office of Management and Budget and DOJ’s Anticompetitive Regulations Task Force, revisiting flawed competition policies is critical. The Trump Administration’s recent executive order is a step toward re-balancing competition policy to incentivize investment in innovation, support American leadership, and remove unnecessary barriers to pro-competitive partnerships that benefit patients.
In an increasingly competitive global market, policymakers must continue to prioritize a balanced approach to life sciences M&A.