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Global Corporate Divestment Study

EY's Global Corporate Divestment Study (GDS), focuses on the lessons corporates can learn from private equity firms—from improving portfolio reviews to divestment execution. The study is based on interviews with 900 global C-suite executives and 100 PE executives, plus external market data. The study is accompanied by sector cuts, including Life Sciences available on this page. No longer a sign of weakness or failure, divestment in life sciences continued to heat up last year. In fact, 87% of life sciences companies say their most recent divestment created long-term value in their remaining company. Expiring patents along with regulatory and reimbursement changes were significant divestment drivers. As we move forward over the next year, divestment triggers are changing. Our study found that one-third of life sciences companies plan to divest, largely because they lack capital to fund opportunities. These companies are increasingly divesting to reallocate capital to the core, coupled with investing in innovative technologies and products that are being developed externally. An interesting shift in 2015 was that nearly half of companies from our study said they rarely consider monetizing R&D projects or seeking third-party funding. The feeling is that R&D is too important of an asset to sell or spin off to outside parties. However, companies with this philosophy may end up spreading management time and budgets too thin. In addition, many parties cannot agree on valuation for pre-clinical assets, resulting in further difficulty completing a deal. Regardless, in a crowded and competitive market, more and more leading life sciences companies should consider pooling R&D assets — sharing new ideas and upside if successful.

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  Global Corporate Divestment Study
PDF File: 1.4 MB

26th February 2016

Downloads

  Global Corporate Divestment Study
PDF File: 1.4 MB

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EY Life Sciences

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