Deal Structures in Life Sciences: Looking at the Big Picture

Mergers and acquisitions in the life sciences market reached new heights in 2015.

Asher Rubin and Adam Golden, both corporate partners with the global law firm Hogan Lovells, say that the feverish pace is likely to continue, driven in large part by the need for companies to build their pipelines for future growth and to realize cost savings given pricing pressures from payors.

“What is fueling a lot of this M&A activity is the need for larger pharmaceutical companies to acquire early-stage products and technologies to supplement their existing products,” says Golden.

Because of the long timelines inherent in drug development, Rubin says dealmakers must be prepared to take a long-term view. “So much of what is paid for in a deal might happen five, 10, even 15 years down the road,” he says. “In many ways, signing an agreement is the beginning of a deal, not its conclusion.” People negotiating in this space need to take an approach that facilitates long-term partnerships.”  In addition, big pharma companies are looking to achieve cost saving through synergies as they face higher pricing pressure than ever before.

Golden says it is also crucial that people remember they are operating in an industry where the risks are incredibly high. “Most drugs in development will ultimately fail to be approved, even after huge investments by the drug companies.  Deal structures are negotiated to address the high risk/high reward nature of the industry”

Watch the video above for more exclusive insights from Rubin and Golden.

Hogan Lovells’ M&A Practice

Our M&A team includes more than 500 lawyers working throughout Africa, Asia, Europe, The Middle East, Latin America, and the United States. Together, we handled over US$500 billion in M&A transactions throughout the last three years. Click here1 to download Hogan Lovells 2015 M&A Year in Review.

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