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The life sciences industry is undergoing a tectonic
shift due to regulatory changes and a growing
focus on patient outcomes. In response, leading
companies are using divestments as a fundamental
tool in their growth strategy. Fifty-five percent of
life sciences companies surveyed for our latest EY
Global Corporate Divestment Study expect to see
more strategic sellers during the next 12 months.
In the past year alone we saw M&A activity in the
life sciences sector skyrocket, with global deal
values almost doubling over 2013. Businesses
are under constant pressure to improve portfolio
performance and shareholder returns and
to employ better analytics to make smarter
decisions. In particular, the prospect of activist
shareholders is influencing corporate decisions.
Pressure to improve patient outcomes and
tougher reimbursement criteria from payers
are forcing life sciences companies to rethink
their strategies and refocus on core assets. But
while many companies are using divestments
to change their business models, too few are
properly preparing for this complex process.
As a result, many find themselves rushing to
the finish line without achieving full value.
Our study reveals that half of these businesses
are willing to sacrifice value if it means closing
the deal faster. This is a false choice: our study
outlines the key strategies for successful
divestments that optimize both speed and value.
A note from Jeff Greene
EY Global Transactions Leader
for Life Sciences
About this study
The EY Global Corporate Divestment Study analyzes companies’ top questions and concerns relating to portfolio review and
divestment strategies and provides insights on how to maximize divestment success. The results of the 2015 study are based on
more than 800 interviews with corporate executives, including 104 in the life sciences sector, surveyed between November 2014 and
January 2015 by FT Remark, the research and publishing arm of the Financial Times Group.
• Executives are from companies across the Americas, Asia-
Pacific, Europe, the Middle East, India and Africa.
• 85% of executives are CEOs, CFOs or other C-level executives.
• Executives stated they have knowledge of or direct hands-on
experience with their company’s portfolio review process and
have been involved in at least one major divestment in the
last three years.
• While nine industry sectors are represented, the study
focuses on consumer products, diversified industrials,
financial services, life sciences, oil and gas, and technology.
• More than half of the executives represent companies with
annual revenues that exceed US$1b.
52% of life sciences companies
expect the number of unsolicited
bids to increase this year, more
than any other sector.
Life sciences companies are pruning
portfolios to reinvest in growth areas
48% of life sciences companies made their last divestment because
the asset being sold was not part of the core business.
41% — the highest percentage of any sector — reinvested the funds
raised from their most recent divestment in their core business.
Regulatory and reimbursement
changes are spurring portfolio
rebalancing
of life sciences companies say that
shareholder activism influenced their
decision to divest.
Shareholder activism is driving divestments
would divest a business due to an unfavorable
economic climate caused by regulatory or
reimbursement changes.
42%
Aggressive buyers are looking
for life sciences assets
62%
EY 2015 Global Corporate
Divestment Study