Pharmaceutical companies are experiencing many challenges like increasing cost pressures and protocol-driven care. The reaction must go beyond traditional instruments such as consolidation and pharma has to become more proactive with broad communities of patients to meet the needs of different consumer groups. The industry should deliver positive results for society, in addition such as health, well-being and optimal management of diseases.
Life Sciences companies are experiencing a wave of competing challenges which includes consolidation among providers, especially hospitals; intended to produce efficiency gains, changing expectations and demands of patients who look for a greater role in their own care; increasing cost pressures from payers and the declining autonomy of the individual physicians, while rule-based and protocol-driven care becomes predominant.
Life Sciences companies must to find new and correct answers in order to further achieve profitable and sustainable growth.
Mergers and acquisitions (M&A) have been one of the most effective tools for pharma executives to face the challenges of the industry in the past. M&A as well as divestiture activities play a significant role in life sciences companies’ strategies to gain scale and to add new drugs, new markets and novel technologies.
Many key players will need to buy their way into growth because of pricing pressures, blockbuster drugs going off-patent and organic growth slowing.
Johnson & Johnson’s $30 billion acquisition of Actelion set the scene in 2017. Another prominent example is Gilead Sciences’ intention to buy Kite Pharma and its CAR-T cancer killing technology for about $12 billion. More consolidation in the industry is being expected as it will be more likely driven by people wanting to have access to innovation rather than particularly cost-cutting.
Another area to watch are deals which combine life sciences with technology. Companies might benefit from analytics and digital investments as these capabilities are not typically developed in-house. In case life sciences companies do not use M&A and strategic partnering joining this community, they risk being outpaced by the technology companies.
Part 2 of my blog will be focusing on the impact of the different elements of the life sciences value chain