Less than two weeks after the Federal Trade Commission announced it would be taking a more stringent look at mergers in the biopharmaceutical industry, the proposed Illumina and Grail merger became only the second vertical merger in 40 years (2017’s proposed merger between AT&T and Time Warner) to be legally challenged by the agency. The trial is scheduled to begin in August and is likely to be a focus for life sciences executives as they plan for long-term development of their pipelines.
“Given the high volume of pharmaceutical mergers in recent years, amid skyrocketing drug prices and ongoing concerns about anticompetitive conduct in the industry, it is imperative that we rethink our approach toward pharmaceutical merger review,” said FTC Acting Chair Rebecca Kelly Slaughter.
The COVID-19 pandemic has put a spotlight on life sciences companies, but the reality is that mergers and acquisitions in life sciences have been at the lowest level since 2015. In comparison to the broader market, total M&A capital invested has been increasing for life sciences, but the number of deals has stayed flat.
Drug pricing is likely to remain a flash point between the industry and legislators, and while branded drugs continue to lead the increase in prices, it is difficult to factor in the benefit provided by breakthrough drugs and therapies that have improved targeted effects for a smaller portion of the population.
The takeaway
This is the complexity that personalized medicine and the shift from broad pharmaceutical applications to personalized biotechnologies will bring to the market. A hard look at anti-competitive and protectionist practices is not unwarranted, but it will serve as a headwind to what has been a standout industry in terms of capital activity and social benefit throughout the pandemic.
