Trendspotting 2022: On the Pulse of Life Sciences
Read Time: 2 minutes
ANTITRUST AND COMPETITION TRENDS:
We have recently seen heightened enforcement against life sciences companies. Far from dying down, this enforcement activity is likely to accelerate over the coming year. National antitrust regulators such as the U.S. Federal Trade Commission (FTC) and the UK Competition and Markets Authority (CMA) will likely increase their activity, particularly in relation to M&A transactions and pricing and distribution practices.
Life sciences companies should therefore expect to see more conduct investigations and lengthier, more intrusive M&A reviews. In multi-company situations, such as M&A and IP licensing, these are likely to put stress on the allocation of regulatory risk and complicate the ability of the parties to reach agreement.
In Europe, more life sciences M&A deals involving high-value but low- (or pre-) revenue targets may be referred to the European Commission. The Commission may also pursue additional “excessive pricing” cases in the life sciences sector. At a transatlantic level, cooperation and exchanges of information between national antitrust agencies on life sciences deals are likely to increase throughout 2022. This follows the move in March 2021 by the Competition Bureau Canada, the FTC, the U.S. Department of Justice, the CMA, and the European Commission to create a multilateral working group that analyzes the effects of mergers in the pharmaceutical sector.
These developments will create particular opportunities for investors in the M&A area. First, antitrust considerations may give financial investors an advantage if they have a limited existing footprint in a particular product. Second, the risk associated with antitrust considerations has value. In any given transaction, whichever party is able to more accurately assess the risk will be able to pocket a disproportionate share of the value. Third, M&A deals in the life sciences sector are perhaps more likely to be approved only conditionally (or subject to consent decrees). Therefore, forced divestments of products or pipeline products will create opportunities for potential buyers of the assets to be divested.
ANTITRUST AND COMPETITION TIPS:
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