Strategic alliances are the preferred approach to achieve growth, say US life sciences CEOs

KPMG survey finds higher interest in M&A, but not as the top choice


The annual CEO Outlook, produced by global tax and advisory KPMG, has now been analyzed with the life sciences sector broken out. Among the findings:

  • 43%of US life sciences CEOs say they have a “high appetite” for M&A, an increase from 33% a year ago.
  • 58% of US CEOs said using cheap financing, such as low interest rates before they rise, are a primary driver of deals during the next three years.
  • Cost cutting was seen as a motivator equally among both US and non-US CEOs (39%).

All that being said, the life sciences industry ranks relatively low among industries for current M&A activity; all other sectors, ranging from consumer goods to energy, have a higher appetite for M&A; only asset management, telecommunications and infrastructure lagged the life sciences sector in this regard.

KPMG asked which strategic approaches were most likely to help US companies achieve growth over the next three years, and the most popular one was strategic alliances with third parties (41%) as the most important approach, topping organic growth (25%), M&A (14%), outsourcing (11%), and joint ventures (9%). Compared with a year ago, strategic alliances showed the most significant increase by 26 percentage points and organic growth as an approach to achieving growth objectives fell 18 percentage points among U.S. life sciences executives.

There also seems to be some reassessment or disillusion with partnering with third-party data providers as a tool for growth, which dropped from 48% of respondents to 27%. In contrast, 61% said they will set up accelerator or incubator programs for startup firms.

More details are available at KPMG’s website.