A Profile of Bio-pharma Consolidation Activity
Jordan Paradise, J.D.
The bio-pharmaceutical1 sector is no stranger to consolidation. Over the last three decades, over 110 companies have consolidated to approximately thirty. 2 Notably, the rate and extent of bio-pharmaceutical consolidation has measurably accelerated in recent years with projections of a similar pace into the near future. Ernst & Young reports that bio-pharmaceutical deals reached a ten-year high in 2014, when pharmaceutical companies acquired twenty- seven biotech companies3––a 46 percent increase over 2013 numbers. 4 Deloitte’s 2015 outlook reveals that “life sciences companies are expected to continue expanding their presence in emerging markets through acquisitions and joint ventures.” 5 While the form, terms, and size of these deals––whether they are mergers, acquisitions, or joint ventures––vary widely, they share the overarching characteristic of changing the make-up of the entire industry. Research and development priorities and product ownership will inevitably shift as companies restructure, having an ultimate effect on consumers and on the delivery of health care.
Professor of Law, Loyola University Chicago School of Law. Many thanks to Alexis Fede for research assistance on the information provided in Table 3. This article was developed for Loyola University Chicago School of Law, Beazley Institute for Health Law and Policy’s Ninth Annual Symposium on Access to Health Care, entitled Consolidation and its Impact on Quality, Accessibility, and Cost of Care. 1. The terms “bio-pharmaceutical” and “bio-pharma” used in this article refer to companies in the business of developing and/or marketing traditional chemical compounds regulated by the Food and Drug Administration (FDA) as human drugs, human biologics regulated by the FDA as biological products, or human drug-biologic combination products. This article will also use the general term “drug” to refer to both human drugs and human biologics approved by the FDA. 2. David Davidovic, The History of Bio-Pharma Industry M&As, Lessons Learned and Trends to Watch, PM360 (May 23, 2014), http://www.pm360online.com/the-history-of-bio- pharma-industry-mas-lessons-learned-and-trends-to-watch/. 3. ERNST & YOUNG, BEYOND BORDERS: BIOTECHNOLOGY INDUSTRY REPORT 2015 1, 55 (2015), http://www.ey.com/Publication/vwLUAssets/EY-beyond-borders-2015/$FILE/EY- beyond-borders-2015.pdf. 4. Id. 5. DELOITTE, 2015 GLOBAL LIFE SCIENCES OUTLOOK: ADAPTING IN AN ERA OF TRANSFORMATION 17 (2014), http://www2.deloitte.com/content/dam/Deloitte/sg/Documents/ life-sciences-health-care/sea-lshc-2015-global-life-sciences-outlook-noexp.pdf.