Why So Many Pharma M&As?

By April 24, 2015Pharma Beat
Why So Many Pharma M&As

In 2014 health care-related mergers and acquisitions (M&As) reached a record high of $1.41 trillion in activity, and consolidation is continuing in 2015. Why is this happening?

With fewer drugs coming to market, and brand name drugs losing patent protection, companies are turning to mergers and acquisitions for growth. Companies would invest in research to fuel growth, but the economic climate has created an unprecedented urgency to perform. M&As provide a relatively easy fix to improve costs and the bottom line.

Companies with a ready supply of cash seek out acquisition targets with strong pipelines that lack the critical mass to bring products to market. M&As can provide scale advantages in targeted areas, access to large or growing markets, and a bigger pipeline. In short they offer increased value and provide a faster rate of return vs. focussing efforts internally. Long-term, the economics will continue to make M&As an attractive option to pharma companies looking to favourably improve their financial position. So, this trend is not likely to end soon.

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