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Mergers and acquisitions in the biotechnology and biopharmaceutical industry are critically important to the development and manufacturing of new treatments, the NAM said at a House Judiciary Committee staff briefing Wednesday.

To incentivize innovation that helps patients and strengthens the American economy, U.S. antitrust policies must preserve M&A—a critical pathway for drug development.

What’s going on: The life sciences industry, and drug development in particular, is unique among sectors, as 90% of drugs that enter trials never get approved. M&A is a key avenue for biotechnology and biopharmaceutical companies seeking to bring new treatments to patients, NAM Managing Vice President of Policy Charles Crain, who moderated the discussion, told the audience.

M&A to the rescue: M&A activity—typically when one company acquires another—provides the financial resources and expertise needed to commercialize new drugs, according to a recent study co-authored by Dr. Anand Krishnamurthy, an economist and principal at Cornerstone Research and a panelist at the event.

• “We find that drug projects that undergo M&A have a higher likelihood of launching relative to drug products that do not,” the study reads, in part.
• During the briefing, representatives from Life Sciences Pennsylvania and BioNJ recounted how larger companies have helped life sciences startups in their states obtain regulatory approval and deliver novel treatments to patients.

Why they work: Early-stage life sciences firms frequently depend on outside investment to bring new drugs through the lengthy clinical stage process, Crain said.

• “M&A acts as an anticipated exit point for investors in these startups and is critical to attracting this funding,” he said, adding that it also “allows the companies to more freely pursue groundbreaking therapeutic innovation.”

Without M&A in life sciences: Policies that hamstring this crucial funding mechanism in the life sciences could derail innovation, potentially damaging people’s health and costing lives down the line. For the life sciences industry, that is simply too high of a price.