Legal Experts Signal Continued Uncertainty for Life Sciences M&A
“Evolving FTC and DOJ policies leave investors and innovators navigating a cautious M&A landscape
Recent commentary from senior Federal Trade Commission (FTC) and Department of Justice (DOJ) officials signaled a continued commitment to activist antitrust enforcement – compounding the uncertainty for thousands of small and early-state life science companies that depend on mergers and acquisitions (M&A) to bring new treatments to patients.
During Fordham’s Competition Law Institute annual conference, leaders from across both agencies reaffirmed their commitment to active, aggressive enforcement, particularly in innovation-driven sectors like health care. Yet they also articulated a “case-by-case” approach to antitrust enforcement, as opposed to the broad brushstroke approach to merger enforcement taken under the Biden Administration.
Importantly, a balanced case-by-case approach to antitrust enforcement is essential when considering the fundamentally different nature of life sciences M&A, which has been empirically shown to improve the odds of bringing new, approved treatments to patients. New research shows that:
- Drugs in development which undergo M&A are nearly twice as likely to launch as those that do not.
- When smaller, inexperienced firms undergo M&A with companies that have experience launching a drug, their drugs programs are nearly three times more like to launch, and their drugs programs with a new mechanism of action are 24 times more likely to launch.
- Even after controlling for drug candidate and firm characteristics, there is a large, positive, statistically significant association between M&A and new and novel drug launches.
What’s behind these research findings? Biopharmaceutical M&A enables experienced companies to provide smaller, early-stage firms with the significant resources, infrastructure and experience needed to traverse the long, costly and risky process of launching a new medicine.
Misguided aggressive antitrust policies threaten this dynamic and thereby threaten American leadership in life sciences innovation. In his remarks, FTC Bureau of Competition Director Daniel Guarnera also highlighted FTC Chairman Andrew Ferguson’s recommendations for rescinding or revising “anticompetitive regulations” in order to reverse “regulatory processes [that] may have been coopted to stifle competition.”
These efforts by the Trump administration to address anticompetitive regulations are a critical opportunity to reduce barriers to pro-competitive life sciences M&A – such as the Hart-Scott-Rodino premerger notification rule and the 2023 Merger Guidelines. PULSE highlighted these priorities in recent comments to the Office of Management and Budget (OMB) and FTC and DOJ.
As FTC and DOJ officials recalibrate their enforcement approach, they would do well to recognize the unique, differentiated role of life sciences M&A. New medicines for patients depend on it.
