Survey: U.S. M&A activity likely to increase

U.S. drug makers are likely to step up their acquisition activities in a bid to find new therapies, and they have the cash to do so, according to a survey by KPMG reported by Pharma-Times.

The consultants polled 100 U.S. senior pharmaceutical executives, of which 83% said it is likely their companies will be involved in a merger or acquisition as a buyer or seller in the next two years.

Of respondents, 41% believed the largest area of spending in the next year would be for acquisitions, followed by new products and services at 38%, and R&D at 38%.

A strategic acquisition was cited as the highest priority investment area by 41% of executives surveyed, followed by expansion into new markets at 22%.

Top issues facing their companies included patent expirations of key therapies and generic competition at 58%, followed by increasing regulation and enforcement (45%) and lack of new products in the pipeline (34%).

More than 75% of executives said their organizations had significant cash on hand, and 50% expect to increase capital spending over the next year. More than a third said investment was already underway, while an additional 36% said spending would be made before the end of the first quarter of 2012.

When 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, followed by 16% who believe cost reduction initiatives are the priority. Some 16% say improving operation processes and related technology will be the main focus.

When asked about the timing of a full recovery, 31% said by the end of next year, 27% believe it will not happen until the end of 2013, and 27% say the end of 2014. In terms of headcount, 41% of executives said they plan to add personnel next year, while 23% "never expect hiring 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.