An image of 3 different medication capsules
An image of 3 different medication capsules
… Healthcare Business Strategy: Pharmaceutical And Biotech Mergers & Acquisitions …

3 MULTI-BILLION PHARMA DEALS UNDER REGULATORY SCRUTINY

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:

  • Abbvie acquiring Allergan: $63 billion
  • 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.

· Abbvie ( NYSE: ABBV ) based in North Chicago, Illinois and Allergan ( NYSE: AGN ) headquartered in Dublin, Ireland have proposed selling off two drugs, brazikumab and Zenpep. Brazikumab belongs to the same IL-23 inhibitor class as AbbVie’s Skyrizi; each is targeting the inflammatory bowel disease ( IBD ) market sector. Allergan’s Zenpep and AbbVie’s Creon are used to treat pancreatic replacement enzymes

· For Bristol-Myers Squibb ( NYSE: BMY ) located in New York City and Celgene ( NASDAQ: CELG ) based in Summit, New Jersey to complete their deal, they are offloading products as well to satisfy regulators. Amgen ( NASDAQ: AMGN ) has stepped forward to buy the drug Otezla from Celgene for $13.4 billion

· As for Roche ( OTCQX: RHHBY ) headquartered in Basel, Switzerland and Spark ( NASDAQ: ONCE ) located in Philadelphia, Pennsylvania, their deal is hovering as it remains under consideration by regulators

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.

This is not to say all multi-billion pharmaceutical buyouts involve being stuck in antitrust quicksand. Within the last 18 months, Pfizer acquired Array BioPharma for $11.4 billion and Takeda picked up Shire for $62 billion ( the largest acquisition by a Japanese company to date ) with close monitoring by various regulatory authorities but successfully closed in a reasonable amount of time.

Roche is one of the largest pharmaceutical companies in the world, weighing in with over $57 billion in annual sales. The Spark buy is a strategic bolt-on for them; for Abbvie and Bristol-Myers Squibb, their deals are large scale acquisitions which may involve hefty breakup fees if the transactions aren’t completed.

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.

For competitors, this is an organizational and product franchise threat. A larger company may have capital resources and contracting strategies that enable it to gain ground against well-positioned rivals quickly. For marketers, a product with modest income performance can boost sales with enriched commercial resources and better market access from a larger parent organization.

Once a transaction is completed several challenges emerge including:

  • Debt management is paramount; post-merger and acquisition debt loads can be a burdensome drag on earnings and future reinvestment
  • 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.

When these factors are considered as part of the approval requirements and/or public concern, deal-making processes slow down and may or may not add additional costs to the final sale if approved.

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.

By good fortune accompanied by possible risk, some pharmaceutical companies have a singular enormously successful product or a flagship product accompanied by other profitable but lesser scale products. Abbvie was one such company with their drug Humira and a portfolio of other products with healthy but smaller sales numbers hence their interest in buying Allergan.

Other companies to consider like this include Merck ( Keytruda ), Amgen ( Enbrel ), Lilly ( Trulicity ) and Gilead ( Biktarvy ) and Biogen ( Tecfidera ). If they cannot find ways to refill their pipelines organically or through smaller-scale acquisitions to build revenue streams and profitability, larger-scale deals are one of the primary strategies considered along with aggressive cost-cutting measures.

Thank you for reading this story

Learn more about the healthcare industry; read my articles about its medical and business trends, content marketing and digital strategy, brand and product management, consumer wellness, managed care and market access strategy.

About me

Hi, my name is John Baresky and I have over 25 years of experience working in the healthcare industry.

I have been developing and sharing important information with physicians, nurses, pharmacists and other clinicians plus consumers, patients, healthcare business professionals, investors and other stakeholders throughout my career. Healthcare is a vast industry; I craft its array of clinical, business, academic, technical, and consumer topics into precise message content and stories quickly understood and immediately useful.

The content I write aligns with your organization’s voice, SEO elements and marketplace; it establishes trust in your company and recognized value in its products and services. I can help you and your content marketing create the customer bond that grows sales.

Thank you for reading this story

Read my other articles about medical and healthcare business trends, content marketing and digital strategy, brand and product management, consumer wellness, managed care and market access strategy. Contact me today for your healthcare content writing and content strategy needs.

I have over 20 years of experience in the healthcare industry producing valuable healthcare content for audiences and customers spanning physicians, nurses, pharmacists plus pharmaceutical companies, medical technology manufacturers, healthcare provider organizations, managed care, investors, consumers and other stakeholders.

Visit and connect…

LinkedIn

Portfolio

Twitter

Google My Business

As a healthcare content writer, my work aligns with an organization’s voice, brand, SEO elements, marketplace and objectives. It establishes trust in their company and recognized value in its products and services that generates revenue.

This experience was earned through working at Walgreens, Pfizer, AbelsonTaylor, TAP (Takeda Abbott Partnership), Hospira Worldwide and Boston Software Systems. ​

To a large degree, my professional interests emulate my family which includes doctors, nurses, physician assistants and other clinicians plus those that are working in healthcare administration and commercial enterprises.

Bare Sky Marketing LinkedIn Business Profile

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store