Big Pharma: Path to Deals Grows More Complex
Ernst & Young has found big pharma’s capacity for M&A has decreased just when it needs transactions for growth and shareholder returns. Big pharma is defined as the 16 largest United States, European and Japanese pharma companies measured by revenue.
Ernst & Young cites information from a report released on January 7: “Closing the gap? Big pharma’s growth challenge and implications for deals”
The report says companies are facing a widening growth gap that will increase pressure to drive growth through mergers and acquisitions. However, attempts to make deals will be challenged by the industry’s diminished resources and competition for attractive assets from rapidly growing big biotech and specialty pharma companies.
The report also says with continued flat sales in mature markets, big pharma has increasingly looked to emerging markets to drive overall revenue growth. However, a slowdown in these markets as a result of various factors has widened the growth gap facing the industry.
Ernst & Young estimates that this growth gap will reach approximately US$100 billion by 2015. In other words, big pharma will need an additional US$100 billion in revenue in 2015 just to keep up with overall market growth.
Learn more about the implications for big pharma in 2013.