M&A Milestone Misses the Biodollars Jackpot: Biopharma Deal Payouts Fall Short with Alarmingly Low 3% Success Rate
October 17, 2023
In the biopharma sector, commercial milestones frequently account for up to 40% of so-called earn-out potential in mergers and acquisitions. However, a report from M&A financial services firm SRS Acquiom reveals that only a little of this potential is actually paid out. While $25 billion could be available for sellers from these milestones, the actual achievement rate is only 3% this year. Biopharma is apparently seeing lower success rates on these commercial milestone earn-outs compared to sectors like medical devices or diagnostics. Despite these low returns, companies continue to agree on these milestones due to their lucrative potential and motivation for sellers, who may stay with the development process of the drug post-deal. However, it’s worth noting that hitting these milestones seems more challenging than anticipated, and even though billion-dollar milestone offers have become rarer, they continue to occur.
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[Source: Fierce Biotech, October 17th, 2023]
