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Biopharma M&A Surge: Why Now?

Why biopharma companies are finding mergers and acquisitions so attractive.

M&A activity in biopharma is rising significantly, both in the number of deals and in transaction volumes.

Here are six key reasons why boards are finding M&A deals attractive now:

  1. Renewed focus on growth. After years of cost-cutting and restructuring, many biopharma companies are looking to gain scale as their competitors and customers bulk up.
  2. Need to compensate for revenues from expiring patents. Many biopharma companies have portfolios that have lost patent exclusivity, and they are now making deals with a defined set of targets.
  3. Need to participate in ongoing segment consolidation. More companies are seeing the urgency of concentrating on what they do best and getting out of areas in which they are weak.
  4. High level of acquisition currency and comparatively cheap financing. Companies are taking advantage of their large cash reserves and rising stock prices to pursue takeovers.
  5. Valuation premium for high-growth companies. Even as valuations have soared, investors continue to be supportive of deals involving high-growth companies.
  6. Financial engineering. Some deals are being driven by the prospect of significant tax benefits that can be gained by moving headquarters to another country.

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