Pharma and biotech M&A is set to slow globally in 2016

Subject

Outlook for healthcare and pharmaceutical M&A.

Significance

Healthcare has been a hotbed of merger and acquisition (M&A) activity over the past few years, with deal value outstripping overall M&A activity. In 2015, M&A transactions in the sector totalled 672.9 billion dollars, up 70% from 2014. The high level of activity has continued into 2016 but at a more subdued pace.

Impacts

• Pressure from healthcare funders, principally governments, will contain or drive down the costs of drugs and devices.
• In turn, this will create greater pressure to reduce costs.
• Issues particular to specialty pharmaceutical-biotechnology comapnies are likely to reduce M&A activity in this sector.