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Home > Life Sciences > CHART OF THE DAY: FTC challenges biopharma merger as antitrust scrutiny grows

CHART OF THE DAY: FTC challenges biopharma merger as antitrust scrutiny grows

Mar. 31, 2021 by Adam Lohr

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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.

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Filed Under: Life Sciences Tagged With: Federal Trade Commission, life sciences, pharmaceuticals

About Adam Lohr

Adam is an audit partner and life sciences senior analyst in RSM's cutting-edge industry eminence program. In addition to providing assurance services to his clients, he sits on RSM’s national life science team and leads the San Diego office life science practice.

His senior analyst responsibilities include advising the firm’s life sciences care clients and client servers as they work to navigate the rapidly changing industry environment. Adam regularly writes, presents and advises on capital markets, digital transformation, policy and other issues transforming life sciences. He is an instructor at the regional and national level, and is experienced in the application of ASC 606 revenue recognition for the technology and consumer products industries.

Adam has over 12 years of accounting and finance experience, serving private equity-backed and private closely held companies in the middle market. He specializes in providing financial audit services and helping clients respond to technical, regulatory and economic changes that impact their business.

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