2017 has been a record year for mergers and acquisitions (MAs) in the life sciences sector. Now 10 months into the year there have been significant changes in the industry, with large multi-national companies purchasing smaller firms. SMEs have also gained traction in the market with MAs allowing them to acquire talent and skill sets in sectors they didn’t previously operate in.

Mergers and acquisitions have been particularly prevalent within contract research organisations (CROs). In 2016 the top 10 CROs accounted for more than 50% of the market. This year’s activity is likely to lead to the share of the $45bn market to increase significantly.

MAs provide access to new markets

One of the biggest trends in 2017 has seen US companies emerging into new territories in Europe. One example of this has been Quintiles merger with IT consultancy IMS health. This partnership has allowed Quintiles to access the European market. It has strengthened its proposition in the region with the support of IMS Health and it’s expected to generate annual growth of 1-2% annually.

Without the merger, Quintiles may have struggled to establish itself in the European market. However, with the support of IMS Health, it obtains almost instant access to the market with a structure and network already in place.

The impacts on talent during an MA process

As well as providing access to new markets, MAs also impact on talent acquisition. LabCorp’s acquisition of Covance is an example of how a company can quickly obtain talent and propel its projects forward at a greater pace.

In 2015 LabCorp consolidated its place as one of the largest CROs in the industry with the acquisition of Covance. This was further cemented in 2017 upon its acquisition of Chiltern. The latter had a strong focus on oncology. The move is expected to enhance and develop Covance’s late-phase oncology footprint.

MAs such as LabCorps often result in one of two conclusions for talent. The first is that their role is secured and the acquiring company obtains talent in markets it didn’t previously have. The second alternative is that the talent enters the market by way of redundancy to the benefit of competitors.

It’s possible that the latter will occur with the acquisition of Parexel by Pamplona. At the beginning of 2017 Parexel was listed at number three in the top ten CROs. It specialises in drug development, clinical logistics, commercialisation and regulatory consulting.

It was announced in June 2017 that Pamplona Capital Management, a private equity firm will acquire Parexel for $5bn and will help it “successfully navigate the complexities innate to the biopharmaceutical industry and bring new therapies to market.” The likelihood is, that an acquisition such as this will result in talent entering the market through redundancy or choice.

When this happens, it’s important that companies are well connected to ensure that good talent isn’t snapped up by competitors. In our previous blog, we look at how having a good headhunting firm on your side can be a strong brand ambassador, helping companies attract the best available talent in the market.

If you’d like to discuss talent acquisition within the Life Sciences sector, contact Chad Harrison International today on +44 (0) 151 665 0250