Policymakers are increasingly focused on strengthening domestic life sciences manufacturing. A healthy, predictable environment for life sciences mergers and acquisitions (M&A) should be part of that effort.
Building a life sciences manufacturing footprint is no easy feat. Manufacturing medicines at scale, for potential thousands or millions of patients, requires significant capital, specialized facilities, and technical expertise to navigate complex regulatory and supply-chain requirements.
For many small and early-stage life sciences companies, building these capabilities carries costs beyond what is efficient or feasible – particularly as 80 percent of life sciences companies operate without a profit.
Mergers and acquisitions (M&A) and other collaborations can provide these companies with the U.S.-based manufacturing infrastructure they need to bring medicines to patients at scale.
M&A is often the bridge from discovery to manufacturing. Small life sciences companies are often best positioned to pursue high-risk, specialized science and develop promising new medicines. More experienced companies possess the manufacturing infrastructure and distribution operations needed to produce medicines reliably and bring them to patients.
M&A connects these complementary capabilities. By pairing innovative science with established manufacturing capabilities, life sciences M&A helps new medicines reach patients at scale, while also sustaining and growing the footprint of American life sciences manufacturing.
This symbiotic relationship is a key driver of investment in new life sciences start-ups as well as continued investment in domestic manufacturing.
What the evidence shows. Findings from Cornerstone Research underscore the value of combining complementary capabilities through M&A. Researchers found that, compared with drug projects acquired by another small firm, projects acquired by a more experienced firm are 3x more likely to launch and 5x more likely to launch as a novel drug.
The evidence reinforces a critical reality of life sciences innovation: M&A is an essential pathway to improve the odds that promising drug candidates launch and, as part of their launches, cultivate the U.S. manufacturing footprints needed.
M&A supports U.S. life sciences leadership. The U.S. life sciences industry directly employs nearly 2.3 million Americans, generates more than $3.2 trillion in economic output and indirectly supports nearly 8 million additional jobs. Amid increasing global competition, maintaining that leadership and continuing to scale American life sciences manufacturing requires an ecosystem that supports pro-competitive partnerships – like M&A – that investment and innovation.
Policy matters. As policymakers work to advance U.S. manufacturing, they should recognize the role of pro-competitive M&A in helping innovative companies access the capabilities needed to manufacture at scale and bring new medicines to patients.
A balanced approach to antitrust enforcement supports continued U.S. life sciences leadership – and help ensure that more groundbreaking new treatments and cures are developed and manufactured here in the U.S. for the patients who need them most.