The last couple of years have shown a definite increase in mergers and acquisitions (M&A) in healthcare and pharmaceuticals. As large pharmaceutical companies face revenue losses from expired blockbuster drugs,?buying technology and research is a good way to spur?medical device innovation?while stretching already tight research dollars.Today, the big questions concern which companies are buying, what types of companies they?re looking for, and how much they?re willing to spend, according to an article on the Xconomy website.For the large companies, these activities help the short-term bottom line with the potential for large future payoffs should the technology prove successful.At Merck, about 60 percent of the company?s revenue comes from alliance-related products and patents. That?s a significant percentage, especially from a company that spends an average of $5 billion annually in research and development. Similar percentages are becoming common at pharmaceutical and biotech companies of different sizes.Large pharmaceutical companies, the Xconomy article reports, face increasing competition from large biotechnology companies, specialty pharma and generic drug businesses. This situation favors smaller firms seeking buyers or alliances, as well as their investors, since an acquisition by a larger partner offers an often welcome payout.If big pharmaceutical companies hold out for lower acquisition costs, independent biotechs may become even more powerful competitors in the market for M&A deals as well as alliances. That?s especially true, according to the article, if these biotechs already have products on the market generating revenue.

The process, however, isn?t easy.?Mergers and acquisitions involve many people and require significant due diligence.?For these investments to have maximum return-on-investment, any company with a focus on M&A activity needs tools and processes to streamline this complexity as much as possible.

Fortunately, innovative companies are bringing unique approaches to tackling this complex problem. Partnering and alliance management are the keys to finding some of these solutions.

Source:?Xconomy, January 2013