2014 is set to be a bumper year for mergers and acquisitions across the life sciences industry as corporates seek to take advantage of new technologies and innovation, according to experts from KPMG.
Chris Stirling, global head of KPMG’s life sciences practice, commented: “2013 has seen companies across the life sciences sector really take stock and undertake root and branch portfolio reviews of their organisations.
“Certainly the larger corporates have taken a close look at their strategies this year, leading them to divest of non-core parts of their business – the sale of the Ribena and Lucozade brands by GSK being a prime example.
“Additionally, there has been further reassessment of strategy around where R&D money should be allocated to ensure the largest return on investment.
“After all, the hurdles to getting a significant blockbuster drug to market are much greater than even five years ago. Companies are therefore being more cautious, wanting to be absolutely sure that the end-product will be well-regarded globally, before going ahead with expensive trials.
“As we head into 2014, I believe the continuation of this trend will lead to increased specialisation around a smaller number of therapeutic agents. Where companies don’t have strengths in these areas, we expect them to divest, partner or enter into joint venture arrangements.
“Acquisitions will occur where companies seek opportunistic add-ons to their core business. Indeed, we’re already seeing evidence of companies making strategic plays to bolster their existing portfolios, such as Bayer making a $2.4bn bid for prostate cancer drugmaker Algeta.
“Whilst Private Equity remains reasonably risk averse, they will operate at the fringes where they feel the risks are more controllable.”
For further press information please contact:
KPMG Corporate Communications – Transactions & Restructuring
Tel: 0161 246 4623
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.