Biotech Mergers and Acquisitions, and the Antitrust Risk

New Jersey Lawyer August 2017

Anjana D. Patel, a Member of the Firm in the Health Care and Life Sciences and Litigation practices, in firm’s the Newark and New York offices, and Patricia M. Wagner, Chief Privacy Officer and Member of the Firm in the Health Care and Life Sciences and Litigation practices, in the firm’s Washington, DC, office, co-authored an article in New Jersey Lawyer, titled “Biotech Mergers and Acquisitions, and the Antitrust Risk.”

Following is an excerpt (see above to download the full article in PDF format):

The biotechnology industry has seen an upsurge in mergers, acquisitions and consolidation transactions (hereinafter consolidation transactions) over the last several years. The reason, in part, for this uptick is because of the pressures biotechs face to ensure they develop a deep product pipeline with a high potential for commercialization. As a result, the success and long-term sustainability of any biotechnology company is dependent on obtaining funding to push through more research and development, as well as obtaining advanced expertise in regulatory compliance and sales and marketing from other more established biotechs or big pharma. At the same time, there has been increasing interest from investors in buying biotechs with pipelines of emerging products that have a potential of reduced research and development time, and thus expedited time to market. This mutual demand has created a highly competitive deal market as more and more biotechs are being bought and sold. 

Many biotechs view the upward trend in these consolidation transactions as an opportunity to gain more scale and leverage to successfully compete and thrive in this environment. However, biotechs should be aware of the legal and regulatory prohibitions associated with these transactions, especially the potential risk under the antitrust laws. This article discusses some of the major risk areas under the federal antitrust laws. ...

The upward tick in biotech consolidation transactions is likely to continue in the near future, especially as the industry becomes highly competitive. Biotechs that are well educated with the very real antitrust risk of engaging in a consolidation transaction in advance of entering into the transaction process will be at an advantage because ignorance of the impact of these laws could mean abandoning a consolidation transaction after much time, effort, resources and expense are invested in the process.