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… Healthcare Business Strategy: Pharmaceutical And Biotech Mergers & Acquisitions …


John G. Baresky

Large scale pharmaceutical mergers and acquisitions are nothing new in healthcare but three of the latest deals are getting a lot of scrutiny from the Federal Trade Commission.

Pharmaceutical and biotech companies are under heavy pressure to perform commercially for investors and clinically by healthcare customers. As they seek to build profitability and their pipelines, mergers and acquisitions are part of their corporate strategies. Three recent deals underway have drawn the attention of antitrust regulators and watchdog groups; they encompass:

  • Bristol-Myers Squibb buying Celgene: $74 billion
  • Roche’s takeover of Spark Therapeutics: $4.3 billion

Satisfying Regulators and Public Interest Groups Are Part Of Healthcare Merger and Acquisition Business Requirements

For antitrust purposes and other reasons, the FTC is digging deep to assess individual attributes and assets of each company separately and how they will align if combined. In the case of the Roche and Spark deal, the FTC and the United Kingdom Competition and Markets Authority ( CMA ) are both reviewing the buyout.

Ongoing Considerations For Abbvie, Bristol-Myers Squibb and Roche

Regulators may require additional action from any of the 6 companies involved in these 3 transactions which potentially could delay or derail plans to bring the companies together.

Healthcare and Pharmaceutical Commercial Strategy Continues To Depend On Mergers And Acquisitions To Drive Growth And Out-Maneuver Competitors

The motives behind the mergers and acquisitions vary and may involve not only replenishing pipelines but also represent opportunities to consolidate operations to reduce costs or enlarge the host company to gain competitive mass, negotiating clout with PBMs, hospitals, health systems, payers as well as debt to avoid a takeover. Combining large scale drug producers can easily catapult two top 20 companies into the top 10 based on total sales.

  • Developing a new earnings forecast and updated corporate strategy
  • Integration of two organizations including staff, IT, facilities, etc.
  • Branding, commercial identification of acquired product lines

Business Practice Concerns Draw Attention To Healthcare Business Processes And Contracting Arrangements

Besides overlapping product lines, government agencies and various advocacy groups critique the scale and scope of the proposed combined organizations and their business practices. Pharmaceutical and biotech companies deploying controversial contracting and rebate arrangements with payers, steep price increases and intricate patent protection measures are trying to better position themselves against other companies, including generic producers, to maintain and grow income.

Moving Forward, It’s Best To Anticipate More Healthcare And Pharmaceutical M&A Deals

We can expect to see other big deals on the horizon especially if larger players have major portions of their income based on one or a very limited number of products.

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