• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to secondary sidebar
  • Skip to footer

  • Opinion
  • Health IT
    • Behavioral Health
    • Care Coordination
    • EMR/EHR
    • Interoperability
    • Patient Engagement
    • Population Health Management
    • Revenue Cycle Management
    • Social Determinants of Health
  • Digital Health
    • AI
    • Blockchain
    • Precision Medicine
    • Telehealth
    • Wearables
  • Startups
  • M&A
  • Value-based Care
    • Accountable Care (ACOs)
    • Medicare Advantage
  • Life Sciences
  • Research

How Can Biopharma Companies Sustain Growth & Innovation?

by Fred Pennic 06/30/2022 Leave a Comment

  • LinkedIn
  • Twitter
  • Facebook
  • Email
  • Print
How Can Biopharma Companies Sustain Growth & Innovation

What You Should Know:

– The traditional approach to fostering biopharma growth is no longer sustainable, according to Accenture research and analysis. The new research reveals perspectives on the life sciences industry based on an extensive analysis of over 300 M&A deals made by the top 30 biopharma companies between 2010–2021.

– The analysis reveals multiple factors are eroding the sustainability of an inorganic growth strategy, such as rising costs of M&A, declining ability to pay and new challengers. However, the pace of innovation in life sciences is at an all-time high.

Inorganic Growth Strategy

With biopharmas continuing to develop capabilities through i.e. AI and analytics, we’re experiencing an exciting and accelerated pace of innovation. Traditionally, biopharma companies have relied heavily on M&A for growth, with more than 60% of their marketed assets coming through acquisitions over the past 15 years. Accenture explored those patterns and identified three driving factors eroding the sustainability of an inorganic growth strategy:

1. Rising costs of inorganic growth: for M&A deals valued at more than $500M, the average takeout premium in biopharma has grown from 51% in 2018 to roughly 71% in 2021.2 This is in part due to the increasing amount of venture capital flowing to biotechs with total investments in biotech nearly doubling in 2021 compared to 2019.3 In Q1 2022, public markets slowed with biotech performance dropping and capital raised decreasing. Nevertheless, private markets remain healthy with total VC investment in Q1 2022 being the second-largest quarter of all time (after Q1 2021) for biotech-venture capital funding.

2. Biotech going to market: smaller biotech companies were responsible for ~55% of all drugs to brought to market between 2017 and 2021— further fueling the escalating deal premiums.

3. Increasing profitability pressures: biopharma’s are experiencing margin declines in almost every therapeutic area. In fact, this decline is expected to be over 6% on average, with anti-infectives expected to experience the largest decline at 11.6%.

4 Growth Pathways for Biopharma Companies

Accenture identifies four key growth pathways for biopharma companies, including insight into the growth pathways the top 30 biopharma companies used to achieve their goals:

1. Builder: Biopharma’s traditional way of bolstering pipeline assets by bolting on late-stage acquisitions. 70 percent of all deals over the past 10 years were Builder and Architect pathways, but the traditional Builder pathways approach is becoming less appealing.

2. Architect: Early-stage asset acquisitions—often with a biotechnology platform (bio-platform)—that enable companies to expand their pipeline across therapeutic areas. Analysis finds a 30 percent increase in Architect pathways over the past five years compared to the previous five year period.

3. Ecosystem: Acquisition of know-how and capabilities to innovate faster or reach customers in a new way i.e., through analytics, AI, new devices, etc. 16 percent of the total volume of M&A deals focus on Ecosystem pathways.

4. Controller: Geographic expansion or vertical integration i.e., growth markets, control supply, or points of sales. The analysis finds 14 percent of deals focus on geographic expansion or vertical integration (Controller pathways).

3 Key Actions for New Era of Innovation & Growth

With the pace of innovation accelerating and the expectation of companies to keep pace, the future of growth and M&A is set to transform. Accenture identified three key actions biopharma companies should implement in this new era of innovation and growth:

1. Combine biotechnology platforms (bio-platforms) and capabilities to create value

Different bio-platforms can and should help each other evolve in new directions and create value together. Ecosystem growth pathways that provide access to computational power, data, and advanced analytics, as well as digital and automation technologies, help power bio-platforms to develop treatments faster.

2. Become a “cross-platform” organization and culture

As companies develop additional assets using bio-platforms, they will learn how to develop these assets faster and more efficiently. This learning can and should then be applied to other bio-platforms and various therapeutic areas to increase speed.

3. Create a novel science and technology (S&T) incubator that reports to C-suite

If executed well, the bio-platform strategy will lead to a proliferation of assets in various therapeutic areas (TAs). It is not efficient to keep building new TA verticals and therefore biopharma will need to externally source experts, skill sets, capabilities, and relationships on demand.

  • LinkedIn
  • Twitter
  • Facebook
  • Email
  • Print

Tap Native

Get in-depth healthcare technology analysis and commentary delivered straight to your email weekly

Reader Interactions

Primary Sidebar

Subscribe to HIT Consultant

Latest insightful articles delivered straight to your inbox weekly.

Submit a Tip or Pitch

Featured Insights

2025 EMR Software Pricing Guide

2025 EMR Software Pricing Guide

Featured Interview

Kinetik CEO Sufian Chowdhury on Fighting NEMT Fraud & Waste

Most-Read

Medtronic to Separate Diabetes Business into New Standalone Company

Medtronic to Separate Diabetes Business into New Standalone Company

White House, IBM Partner to Fight COVID-19 Using Supercomputers

HHS Sets Pricing Targets for Trump’s EO on Most-Favored-Nation Drug Pricing

23andMe to Mine Genetic Data for Drug Discovery

Regeneron to Acquire Key 23andMe Assets for $256M, Pledges Continuity of Consumer Genome Services

CureIS Healthcare Sues Epic: Alleges Anti-Competitive Practices & Trade Secret Theft

The Evolving Role of Physician Advisors: Bridging the Gap Between Clinicians and Administrators

The Evolving Physician Advisor: From UM to Value-Based Care & AI

UnitedHealth Group Names Stephen Hemsley CEO as Andrew Witty Steps Down

UnitedHealth CEO Andrew Witty Steps Down, Stephen Hemsley Returns as CEO

Omada Health Files for IPO

Omada Health Files for IPO

Blue Cross Blue Shield of Massachusetts Launches "CloseKnit" Virtual-First Primary Care Option

Blue Cross Blue Shield of Massachusetts Launches “CloseKnit” Virtual-First Primary Care Option

Osteoboost Launches First FDA-Cleared Prescription Wearable Nationwide to Combat Low Bone Density

Osteoboost Launches First FDA-Cleared Prescription Wearable Nationwide to Combat Low Bone Density

2019 MedTech Breakthrough Award Category Winners Announced

MedTech Breakthrough Announces 2025 MedTech Breakthrough Award Winners

Secondary Sidebar

Footer

Company

  • About Us
  • Advertise with Us
  • Reprints and Permissions
  • Submit An Op-Ed
  • Contact
  • Subscribe

Editorial Coverage

  • Opinion
  • Health IT
    • Care Coordination
    • EMR/EHR
    • Interoperability
    • Population Health Management
    • Revenue Cycle Management
  • Digital Health
    • Artificial Intelligence
    • Blockchain Tech
    • Precision Medicine
    • Telehealth
    • Wearables
  • Startups
  • Value-Based Care
    • Accountable Care
    • Medicare Advantage

Connect

Subscribe to HIT Consultant Media

Latest insightful articles delivered straight to your inbox weekly

Copyright © 2025. HIT Consultant Media. All Rights Reserved. Privacy Policy |