Pharma mergers and acquisitions: – An initiative towards new business opportunities
The Biopharmaceutical industry is probably one of the most active sectors for mergers and acquisitions. These industries do greater number of deals and transactions than any other sector. Both merger and Acquisition are an essential component of the pharmaceutical business model and are crucial for achieving growth and competitive advantage.
How M&A is benefiting the pharmaceutical industry
The single most essential driver for changes in the Pharmaceutical industry is the ever-increasing cost of drug development, which can be controlled with the help of M&A to a greater extent. Most companies can no longer afford to carry out R&D and require high financing or Acquisition for late-stage trials to find innovative compounds and need the capability to navigate complicated regulatory pathways, which are only possible by big pharmaceutical industries. Hence, big pharmaceutical companies who want to enter a new industry or expand their business towards innovation merge with other companies or acquire smaller, creative companies by funding them or buying that company’s stakes. This is how merger and Acquisition can benefit both the big and small pharmaceutical industry.
Case Study: –
The biggest M&A (mergers and acquisitions) of 2020 are as follows: –
AstraZeneca & Alexion: –
By far, one of the biggest pharma deals of the year 2020 was between AstraZeneca and Alexion, where AstraZeneca offered a deal worth $39 billion to Alexion. Alexion has predominantly featured among the top list of biopharma takeover prospects in the last few years. With the purchase, AstraZeneca will strengthen its immunology franchise with a blockbuster of $4 billion, plus a pipeline of 11 drugs for autoimmune and rare diseases. The boards of directors of both industries have unanimously sanctioned the acquisitions. With both the sectors’ shareholders’ consent, the purchase is poised to close in Q3 2021. Upon completion, Alexion shareholders will also get a 15% stake of AstraZeneca.
Way Forward with Mergers and Acquisitions in the fiscal year 2021:
Mergers and Acquisitions, an aspect of the business world that has been rapidly growing in recent years, are poised to bloom in the year 2021 and beyond as it is one of the easy ways for pharma companies to gain horizontal or vertical integration in an industry without having to break into a new part of it from scratch. Due to the pandemic, as the market was at a complete standstill in deal activity, smaller innovative pharmaceutical companies are looking for funds and, bigger pharmaceutical industries are looking for innovations, which means that there is even more significant potential for more M&A deals to take place in the coming years as pharma businesses are recovering and are determining the best and easy way to navigate and grow the market.