US M&A activity will spur pharma growth, says KPMG
Significant cash available to make acquisitions
US pharmaceutical firms will be on the acquisition hunt over the next two years, according to a survey by audit, tax and advisory firm KPMG.
In the KPMG Pharmaceutical Industry Pulse survey, which polled 100 senior executives in the US pharmaceutical industry, 83% said it is likely that their company would be involved in an acquisition or merger as a buyer or seller in the next two years. Some 41% said the largest area of spending in the next year would be for acquisitions, followed by new products and services (38%), and research and development (38%).
A strategic acquisition was cited as the highest priority investment area by 41% of executives, followed by expansion into new markets (22%).
More than 50% of executives cited patent expirations of key drugs and generic competition as the top issues facing their company, followed by increasing regulation and enforcement (45%), and lack of new products in the pipeline (34%).
More than 75% said their companies had significant cash on hand and half of them expect to increase capital expenditure over the next year. More than a third said investment was already underway, while 36% said investment would be made before the end of the first quarter of 2012.
Asked what single initiative their company's management would spend the most energy on in the next two years, 23% said investing in organic growth, while 16% said cost reduction initiatives would take priority. Some 16% said improving operation processes and related technology would be the main focus.
When asked about the timing of a full economic recovery, 31% said by the end of next year, 27% said not until the end of 2013, and 27% said not until the end of 2014.
In terms of headcount, 41% of executives plan to hire staff next year, while 23% said they do not expect recruitment to return to pre-recession levels.
‘The good news is companies have cash to invest in or acquire new medicine breakthroughs, or markets and customers to drive some growth,’ said David Blumberg, KPMG national advisory pharmaceutical sector lead partner.
