By Justin Kadis
Strategic Repositioning via Mergers and Acquisitions
This past year helped solidify mergers and acquisitions as a go-to pharma strategy. With approximately $100 billion spent on mergers and acquisitions by mid-2018,1 this new industry standard practice has led to a continuously shrinking landscape — that is at the same time experiencing unprecedented growth. Most notably, 2019 has already witnessed one unprecedented mega-merger, in which Bristol-Myers Squibb acquired Celgene for a purchase price of $74 billion –– potentially a harbinger of a predicted boom in mergers and acquisitions activity.
As the number of top pharma companies shrinks, and the industry landscape becomes more compressed overall, the supply chain has also experienced a marked narrowing. The ongoing growth of the contract manufacturing segment is also a significant driver of merger and acquisition activity in the industry. As big pharma companies increasingly look to outsource specialized technologies and manufacturing capabilities, they are divesting facilities and other assets that they no longer need in their streamlined in-house operations. CDMOs continue to strategically acquire operations at multiple steps on the supply chain to position themselves as a “one-stop shop” with the ability to tackle a handful of processes effectively, either through multiple facility acquisitions from big pharma companies or through consolidation among CDMOs with different capabilities and technologies.
However, even a successful merger or acquisition of manufacturing facilities creates a range of asset management issues, including determining the fate of redundant operations and equipment.