EY Releases M&A Report for 2018

January 8, 2019

Pharmaceutical Executive

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.

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:

  • 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

  • Digital alliances should be a priority too

 

Read the full report here.