Following a challenging funding and policy environment, new data shows an uptick in biopharmaceutical mergers and acquisitions (M&A). This is an encouraging sign of a healthy biopharmaceutical innovation ecosystem.
As experts observe continued funding pressures on the industry—especially for small and mid-sized biotech companies—M&A is a critically important mechanism for sustaining innovation. More than 80 percent of life sciences companies operate without a profit and rely heavily on external capital and partnerships to fund early-stage research.
“The need for M&A certainly hasn’t gone away.” – John Carroll, Editor & Founder, Endpoint News
Against this backdrop, M&A is increasing the odds that promising discoveries in the pipeline can survive the long journey from the laboratory to the clinic—a process that can take more than a decade, cost billions and carries a roughly 90 percent failure rate.
New research underscores the unique, important role of M&A for the life sciences:
- Drugs in development that undergo M&A are nearly twice as likely to launch, and novel drugs are more than three times as likely to launch.
- When smaller companies partner with more experienced ones, drugs are substantially more likely (3x) to launch, and drugs with entirely new mechanisms of action are nearly 24 times more likely to launch.
Beyond improving the success-rate of drug development, M&A also plays a vital upstream role in incentivizing investment. For venture capital and other investors, M&A can represent a critical and reliable exit pathway, helping attract the funding required to fuel the next generation of discoveries.
Growing industry confidence reflects this reality, with dealmaking activity now ranking among the top drivers of optimism in the biopharmaceutical industry—underscoring that pro-competitive partnerships are essential to advancing scientific discoveries and bringing new therapies to patients. To maintain U.S. leadership in developing new treatments and cures, policymakers must prioritize policies that recognize the unique and fundamental role of pro-competitive life sciences M&A and support the partnerships that bring lifesaving innovations to patients.