Acquisitions and licensing are core to pharma and big biotech growth as pipelines thin and assets lose patent protection. Yet a look back at prior years’ eye-popping deal sums reveals many billions of dollars of write-offs and lost value. Key assets failed or disappointed in at least half of 2014’s largest acquisitions and licensing deals. Failure is part of the drug discovery landscape, but some lessons can be learned from dud deals.

This report assesses dealmaking activity during 2014–16, analyzing the success rates and discussing reasons for failure. It outlines the role of dealmaking in the industry as large companies seek to re-fill pipelines and plug earnings gaps. It extracts some lessons from the failures of many of 2014’s largest M&A transactions, outlining not just clinical setbacks but also post-approval hurdles to achieving hoped-for product revenues. The report also looks at 2018–19’s largest deals and asks, will the same mistakes be repeated? Finally, it outlines some of the senior management incentive and accounting structures that make richly priced deals both attractive and inevitable.

This Datamonitor Healthcare report contains a Strategy module.