Navigating M&A in the pharma, biotech and med device marketplace

The medical device, biotech and pharmaceutical industries are experiencing change like no other in the past couple of years. From a booming mergers and acquisitions (M&A) marketplace to the political spotlight on pricing; business leaders in the pharma, medical device and biotech industries need to be light on their feet to navigate a market that feels new each and every day.

 

While the M&A climate in general business has cooled over the past year, life sciences is one area where it has not slowed down and experts agree that it will continue on its current trajectory. Why?

 

Changing administration

What’s driving all this change? For starters, we have a new administration with substantially different viewpoints than past leadership. Immediately following the elections, pharmaceuticals saw a bump in their stock prices as investors were optimistic that the change would be net positive. From Fortune:

 

“A potential influx of foreign cash and improved stock valuations under the Trump administration would likely boost deal making in the industry, which has been anemic ever since political rhetoric against high drug prices picked up late last year, industry analysts and investment bankers said.

 

That could mean renewed interest in some prime targets of takeover speculation, from cancer drug specialists like Tesaro (TSRO, +0.52%) to rare diseases firms like Sarepta Therapeutics (SRPT, +6.20%), according to several healthcare investors interviewed by Reuters.”

 

Globalization continues to be a trend

Medical device, biotech and pharmaceutical companies continue to recognize the advantages of acquiring and merging with companies overseas to gain access to:

 

  • Manufacturing plants
  • Under-tapped customer bases
  • Intellectual property
  • Broader talent pool
  • More lenient regulation
  • Localized natural resources

 

Even with the administration’s emphasis on keeping jobs and manufacturing in the United States, it is unlikely to affect life sciences because of the unique specialization of this industry. Companies must go where the talent and facilities make their operations as cost effective as possible, especially with ongoing downward pressure on drug pricing.

 

How can medical device, biotech and pharmaceutical organizations keep up with the revolving door of change?

One constant of businesses of all shapes and sizes is spending. Whether it’s travel, general business expenses or invoice payments, keeping a close eye on expenditures helps businesses plan better and be more nimble in the face of economic and marketplace uncertainty.

 

This is especially important if your company is engaging in M&A activity.

 

If you’re acquiring, it’s important to get spending tightly in hand so your finances are pristine on paper. Likewise, if your company is being acquired or merging with another entity, automating expenses makes data collaboration easier and reporting more accurate. This can ease the painful and often rocky road of bringing two companies together.

 

3 ways to prepare for M&A with expense management

If you are choosing cloud based solutions  to help you automate and better manage your spending, we recommend keeping the following in mind:

 

  1. Prioritize connection with multiple ERP systems. You do not know what systems your future acquisitions will hold, and staying as system-flexible as possible will save you expensive problems down the road.
  2. Buy for the future. Consider how your company will grow and acquire years, not months, down the road. Ensure the solution you choose is scalable to grow with you.
  3. Aim for data visibility. The most valuable reason to choose to automate your spending is to gain visibility into your own data. Choose a solution that allows you to see your spending tailored to your unique needs—keeping expenditures in policy and within budget when it’s most crucial.

 

It’s an exciting time to be in the business of life sciences and the fast pace is unlikely to slow down. Getting your travel, expense and invoices systems automated, with deep visibility into spending, will both protect and prepare your business for what looks like will continue to be a wild ride in 2017!

 

For more information about how Concur works with pharma, biotech and medical device organizations, watch our Concur Solutions for Life Sciences overview.  

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