Stockwatch: Riding the M&A rollercoaster
This article was originally published in Scrip
An important dynamic currently driving the biopharmaceutical space is the replacement of lost product revenue at pharmaceutical companies through merger and acquisition (M&A) transactions biotechs with promising pipelines. However, the hoped for renewal is not always a smooth path and is more often more akin to riding a rollercoaster.
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Stock market reaction to the first day’s news from the 38th J.P. Morgan Healthcare conference in San Francisco was negative, probably because expectations for a continuation of December’s bumper M&A bonanza were too high.
With the 38th J.P. Morgan Healthcare conference about to start in San Francisco, expectations in the investment community are naturally high. This is after a year when the NASDAQ Biotech Index approached its 2015 all-time high, fueled by the acquisitions of biotech companies by pharma companies.
Time is the least considered driver of asset valuations in life sciences – and may be a factor behind the low level of M&A deals so far this year. ICON’s Andy Smith provides some advice to the C-suite and business development managers on strategies to clarify the duration aspect in risk-sensitive transaction negotiations.