EY launched its M&A Firepower report, showing that life sciences mergers and acquisitions (M&A) activity in 2018 totaled $198 billion USD. According to the report, life sciences companies focused on building therapeutic scale and optimizing their portfolios, and the 2018 market conditions-especially high valuations for target acquisitions-drove dealmaking away from megamergers toward bolt-on acquisitions and divestitures.
Additionally, the uncertain return on investment and the rapid pace of technology change mean life sciences companies will likely prioritize digital alliances in favor of M&A in 2019.
Key findings highlighted in this year’s M&A Firepower report include:
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Total M&A deal value driven by bolt-ons and divestitures, not megamergers
Firepower remains robust but is not being deployed
Focused companies outperform less focused counterparts
Market fragmentation likely to drive additional deals
The report identifies a number of key industry trends likely to drive M&A in 2019 and beyond:
Continued emphasis on portfolio optimization
Divestitures will increasingly be used to unlock value
