Pro-Innovation Mergers & Acquisitions: Maintaining America’s Leadership in Biopharmaceutical Breakthroughs

Oct 3, 2023 | Blog Post

Thousands of U.S. life sciences companies race every day to find better treatments and cures for a wide range of conditions and diseases. Within this diverse and dynamic life sciences ecosystem – made up of early-stage companies, large-scale entities, research universities and other researchers across the public and private sectors – mergers and acquisitions (M&A) fuel America’s global leadership in biopharmaceutical breakthroughs. M&A allows life sciences companies to bring together the resources, investment and expertise needed to develop and deliver new treatments and cures for patients.

Hundreds of life sciences companies emerge every year in the hopes of advancing therapeutic breakthroughs for existing and emerging conditions. While new scientific discoveries are made every day by early-stage researchers, the path to successfully bringing a treatment to market is extensive, costly and often includes many “failures” along the way – failures that are vital to our understanding of how to effectively treat disease. It’s because of this high-risk pursuit that an overwhelming majority – roughly 80 percent – of biopharmaceutical companies operate without a profit, relying on venture capital and outside investment to advance in their early stages and offset the risks of research and development (R&D).

Pro-innovation M&A offers an indispensable bridge that helps shepherd early discoveries into the lifesaving treatments and cures needed for patients. Life sciences companies of all sizes engage in M&A and other collaborations to achieve broad, efficient allocation of resources and expertise that are essential to stay in operation and navigate the complex regulatory, reimbursement and distribution systems within the biopharmaceutical market. Even when a medicine or treatment receives regulatory approval, the competition that exists between innovative products already on the market, emerging new therapies in development and, eventually generic and biosimilar competition, all contribute to America’s life sciences ecosystem being one of the most competitive industries in the world.

Unfortunately, a flawed approach to life sciences M&A by antitrust authorities – such as the Federal Trade Commission (FTC) – threatens to undermine U.S. leadership in life sciences innovation. In this case, the FTC’s recent broad and sweeping approach to heightened antitrust enforcement is part of a misplaced, backhanded attempt to address the cost of medicines. Instead of addressing the actual affordability challenges facing patients, chilling future M&A among life sciences companies will only undermine the efficiencies, expertise and scale that is needed to expedite novel therapies to millions of Americans.

Although the U.S. judicial system has asserted for decades that mergers between companies with complementary capabilities are likely to benefit consumers — as M&A activity in the U.S. life sciences ecosystem has empirically demonstrated for many decades — recent rhetoric and proposed standards from the FTC make no such consideration. The FTC’s proposed approach to life sciences M&A runs counter to long-standing established precedent that recognizes and promotes the many benefits of M&A and its vital importance as part of a competitive life sciences market.

Maintaining American leadership in biopharmaceutical breakthroughs requires a balanced approach to antitrust enforcement and competition policy. Instead, the FTC risks subjecting innovative life sciences companies to undue scrutiny and legal action by default, while failing to consider the downstream impact to patients and future impact to America’s life sciences leadership. PULSE partners and members will be highlighting the real-world benefit of M&A and the impact of the FTC’s proposed reforms over the coming months. To stay up to date on these developments, click here.