Life sciences companies face rising R&D costs, downward pricing pressure, and increasing regulations, along with geopolitical events like US tax reform. As they rationalize portfolios and focus on fewer segments, there has been a rise in M&A - but is now the right time to reconsider asset swaps as a viable alternative?
In this paper we argue that asset swaps can help swiftly and efficiently build leadership in specific therapeutic categories, looking at the main challenges of this type of transaction and examining how best to execute these deals successfully.
Asset swaps have a number of potential advantages over traditional M&A:
Asset swaps should be especially beneficial to companies with a clear strategy of category leadership. It is important to find a partner with mutual goals, and to build trust and reciprocity, putting aside traditional competitive rivalries to ensure a free information flow and agreed asset valuation.
By focusing on capturing post-deal value, both parties can coordinate integration with separation to transition the new assets into each other's businesses.