Developing M&A strategy Key findings about the CFO’s role in developing M&A strategy M&A: the lifeblood of life sciences Eighty-five percent of CFOs who make M&A decisions a very high priority tend Forty-eight percent of CFOs in the life sciences industry make M&A to report increased collaboration with the CEO in the last three years. This decisions a high or very high priority. In this industry, M&A is an falls to 61% for the rest of the sample (see Chart 12). essential part of the strategic agenda. Chart 12: Percentage of CFOs whose collaboration with the CEO has increased As Andrew Forman, EY’s Global Life Sciences Sector Resident, in the last three years Transaction Advisory Services, observes, “We have seen that M&A in life sciences has continued to be strong throughout the first half of CFOs who make M&A 85 2015, with more than US$160b worth of deals announced and the decisions a very high priority pipeline including several proposed deals that may mean 2015 nears Others 61 2014’s record levels. In life sciences, it’s important to not get left % behind in this rich deal environment.” 0 20 40 60 80 100 There are a number of reasons why M&A is a critical activity for Overall, 37% of CFOs make M&A decisions a high priority (see Chart 13). The this sector: priority CFOs give to M&A varies by seniority, however. Forty-two percent of • Companies have the firepower: life sciences outperformed all other Group CFOs make M&A a high or very high priority, compared with 33% for sectors on the stock markets in the first half of 2015. Regional CFOs. • Big pharmaceutical companies are undertaking portfolio rationalization Chart 13: Over the next three years, how much of a priority will M&A decisions be for to focus on core businesses, leading to multiple divestitures. your organization? • Large global pharmaceutical companies have had very little growth Very high priority 10 in the last four years: M&A can help close the US$100b growth gap. • Companies are seeking to expand scale and share as unit volume High priority 27 growth may be needed to offset weaker pricing. • In the US, as the implementation of the ACA (Affordable Care Act) Medium priority 40 moves forward there has been consolidations among payers who are pressuring prices on drugs and medical devices. Low priority 17 Very low priority 6 % 0 10 20 30 40 50 Partnering for performance Part 5: the CFO and the chief executive officer 28