The Growth Story Behind Life Sciences M&A

In the life sciences sector, the UK stands out as a powerhouse for scientific innovation, strategic investment and commercial potential. The sector’s impact was made clear during the COVID-19 pandemic, when Oxford Biomedica partnered with AstraZeneca to rapidly scale vaccine production and help bolster global supply at a pivotal moment. Given these capabilities, it’s little wonder the UK government has made life sciences a pillar of its national innovation strategy — setting the stage for further breakthroughs ahead.

Mergers and acquisitions can help life sciences companies prepare for such advances. But these transactions also pose significant risks. Finding a target business that is the right fit, as well as protecting value and minimising exposures, requires taking a methodical approach.

In this early stage before a deal happens, brokers can demonstrate their value to clients as not simply insurance providers but as trusted advisers. They can offer expertise and point out pitfalls to guide a client’s transaction to a smooth completion.

Jon Preston

Technology Practice Leader at Travelers Europe

Why the UK remains a global life sciences M&A hub

Globally, M&A activity has been cooling off for life sciences companies. Deal value in the sector fell markedly in 2024 as companies shifted toward smaller, bolt-on deals. However, the strategic imperative for M&A remains strong. The EY Firepower report, which covers life sciences trends and dealmaking, says M&A is critical to growth in life sciences, with most of leading company revenues coming from products derived from these transactions.¹

The UK offers a particularly rich market. The “Golden Triangle” of London, Cambridge and Oxford hosts deep biotech, drug-discovery and medical technology capabilities. In recent years, acquisitions of UK life sciences companies by global businesses including Merck and Danaher demonstrate the appeal of the sector across borders.^2,3

Against this backdrop, the UK’s health industries (which include life sciences) saw deal-value growth of around 79% (from £8.6 billion to £15.4 billion) from 2022 to 2023 — the highest increase in deal value of any other industry.⁴ Venture capital investment in the sector for the first half of 2025 (£1.23 billion) suggests the sector may match or exceed the full-year 2024 level once the year closes.⁵

Growth brings complexity: What to do before the deal is signed

Whether your client is the target or the acquirer in a deal, there are priorities to address before the transaction begins — and opportunities for you to offer strategic insight. Here are the key areas calling for extra focus:

1. Get clarity around strategic rationale and deal fit

The acquirer should genuinely understand why the target matters. Does the transaction expand the product pipeline (e.g., a biotech acquiring a novel discovery platform)? Does it thrust the company into new geographies, regulatory regimes or manufacturing technologies? In the UK life sciences market, acquirers may also be seeking MedTech capabilities, digital health add-ons or AI-driven discovery platforms.

As a broker, you can ask clients questions to ensure their hopes match reality. For example, is the target’s operation aligned with the client’s strategic goals? Are there regulatory, manufacturing or data-platform differences that could undermine the integration? Early risk-mapping of the strategic fit helps your client negotiate from a position of strength.

2. Conduct an insurance and risk architecture review

One of the earliest missteps in M&A is forgetting the insurance dimension until late in the process. Yet the business profile of the combined entity may differ significantly from either pre-deal entity. For life sciences, this is especially true: each entity may face distinct risks involving intellectual property, product liability, manufacturing, data/cyber, and regulation.

Brokers should outline both entities’ insurance portfolios (including protections for cyber, product liability, professional indemnity, directors & officers, and contingent business interruption) and identify mis-matches. Asking some targeted questions can help reveal insurance gaps. For example, what happens if manufacturing delays push out the launch? What if the target’s AI-driven discovery platform fails validation? What if their data breach becomes public post-acquisition? Then determine how insurance would respond in each case. Early alignment prevents late surprises.

There are also UK-specific exposures to consider. These include UK-specific clinical-trial liability, UK-regulated manufacturing under the Medicines and Healthcare products Regulatory Agency (MHRA), EU market access post-Brexit, and cross-border exposures if the target or acquirer holds US/EU business.

To ensure you capture the full range of risks involving the combined entity, provide your client with an insurance-due-diligence checklist. Then flag any items where cover may need adjustment before signing.

3. Prioritise due diligence beyond the financials

In life sciences M&A, value often rests in intangible assets — patents, licences, R&D pipelines, manufacturing tech, and talent. But these are also risk points. For example:

• Intellectual property (IP) - Clarify ownership and transferability. Are licences clear? Are there third-party code or open-source elements to consider?
• Manufacturing/technology integration - If the acquirer plans to integrate manufacturing or AI-driven drug-discovery platforms, what are the risk controls?
• Regulatory landscape - In the UK, post-Brexit regulation means securing MHRA approvals, managing potential divergence from EU regimes, and navigating emerging AI regulation (in MedTech and digital health). Brokers should flag evolving algorithmic liability or AI-driven product liability exposures for these clients.⁶
• Key-person risk - Life-sciences businesses often depend on founders, lead scientists or specialised talent. If they depart post-transaction, the pipeline may suffer. In this phase, brokers can help clients anticipate risks by facilitating scenario-planning workshops, mapping insurance stress-tests under downside cases (pipeline failures, regulatory delays, product recall) and engaging with diligence teams.

4. Assess cultural, operational and integration readiness

Well before parties sign contracts, they should assess how well the organisations will integrate. In life sciences, this could involve merging R&D teams, combining manufacturing sites, aligning compliance cultures, and harmonising IT/data platforms. It’s common for operational and cultural friction to erode the value of a transaction after the deal is complete — but it’s preventable.

Brokers can help clients avoid this scenario by talking through the risks of disruption. For instance, a manufacturing site may require bridge insurance cover if it remains open during integration. Downtime risk may translate into contingent business interruption exposures. Knowledge-transfer risk may affect product liability or IP exposures. Identifying these potential weak spots ahead of time helps structure appropriate cover where needed and mitigate the risks of integration.

5. Conduct cross-border and regulatory risk planning

Given the global reach of many UK life-sciences businesses (and the acquirer’s likely interest in trans-Atlantic or EU-UK deals), cross-border regulatory, tax, export/control and regional licensing risks must be addressed. These risks could include data flows from the UK to the US, US targets subject to Food and Drug Administration (FDA) regulations, and UK targets governed by MHRA and EU regulations.

Brokers can bring their regulatory expertise to help clients dissect their exposures. For example, how does the UK’s regulatory regime diverge from those in other regions — and how could that impact the transaction? Are there pending EU/UK AI-product-liability rules that apply? What about transfer pricing or supply-chain risk arising from Brexit?

Viewing this stage of the transaction through different regulatory lenses feeds into the insurance structure (i.e. helping to determine the need for cover for directors and officers, regulatory investigations, product liability, export-control breaches, etc.). It also strengthens the client’s negotiation and planning stance.

6. Anticipate future claims

Imagine the deal closes and problems quickly surface. In life sciences transactions, post-completion losses often arise from hidden regulatory, quality-system, IP, or data-integrity issues. While Warranty & Indemnity insurance can mitigate losses from inaccurate warranties, brokers can add value by helping clients anticipate the claims most likely to emerge. Misaligned quality-management processes, weak MHRA documentation, or gaps in safety monitoring systems can lead to product-liability, recall, or regulatory-investigation exposures after completion. Poor integration of safety or quality procedures may also heighten Employers’ Liability or product-safety risks. If post-deal performance falls short of public expectations, directors may face D&O scrutiny over statements about pipelines, approvals, or regulatory readiness. Identifying these sector-specific risks early helps ensure the right insurance protection and risk-management practices are in place before contracts are signed.

Where growth plans can unravel

Pre-deal planning is critical because it’s common for major concerns to surface after M&A transactions are complete — and take years to rectify. For example, in 2018, Novartis acquired AveXis for US$8.7 billion. AveXis had secured US approval for its gene-therapy product Zolgensma to treat spinal muscular atrophy, but shortly thereafter it was revealed that the company had manipulated certain animal-testing data submitted as part of its Biologics Licence Application. The company also delayed notifying the FDA even though it became aware of the issue before approval.⁷ While the FDA ultimately found that the manipulated data did not affect the human trial results or the benefit-risk assessment of Zolgensma, the incident took years to resolve and triggered corrective actions, caused reputational damage and increased scrutiny of data-integrity practices.⁸

This case is relevant to the UK because it underscores the need for rigorous due diligence of data integrity, manufacturing and non-clinical evidence for targets whose regulatory filings may focus on the US or EU but whose assets may be developed for the UK and face oversight by the MHRA. Because the MHRA and other global regulators take data-integrity and quality-system issues seriously, an acquirer of a UK life sciences target needs to evaluate whether the target’s non-clinical and clinical data, manufacturing processes, and regulatory submissions are robust and transparent — not just for the US but also for the UK and EU. The divergence of standards and regulatory expectations can expose hidden risk.

How brokers support sustainable growth in life sciences M&A

Pre-transaction planning in the UK life-sciences M&A context is not just about the financial price tag or deal timelines. It’s about safeguarding the value that is often invisible — the intellectual property, regulatory licences, manufacturing capabilities, data assets, and people. Brokers who engage early, provide structured risk-scenario modelling, regulatory insight and integration-aligned cover strategy become far more than insurance providers. They become strategic risk partners.

Here’s a checklist that brokers can run through with clients — before they sign any contracts — to help uncover potentially overlooked areas of risk:

1. Map both parties’ insurance programmes, including cyber, product liability, clinical-trial cover, D&O, indemnity, and contingent business interruption.
2. Identify overlaps, gaps, and mismatches in insurance cover and take action early to align protections.
3. Run scenario stress-tests (e.g. pipeline failure, regulatory delay, product recall, key-person exit) and map the insurance response.
4. Conduct cyber/data-flow due diligence: assess data transfers, third-party processors, cloud systems, and compliance with UK-GDPR and cross-border equivalents.
5. Review IP/licensing transfer risk: clarify ownership, open-source code risks, royalty obligations, and ability to transfer target IP to acquirer.
6. Evaluate manufacturing/operational integration risks: review sites, supply chains, manufacturing technology, and AI systems.
7. Assess retention and key-talent risks: discuss how retention programmes tie into deal negotiation and insurance design.
8. Check cross-border regulatory exposures: review export controls, divergence of UK/EU regulation, AI product liability, and MHRA/EU approval regimes.
9. Provide an integration-insurance blueprint that connects to the post-deal roadmap: assess what bridging cover is required and what scenarios require the insurer to be notified.
10. Develop a disclosure pack for sellers or acquirers: help clients gather information about historic claims, incidents, regulatory correspondence, IP litigation history, key-person dependencies, technology gaps, and data incidents.

“When brokers can help clients articulate and mitigate their major vulnerabilities before they sign, they reduce execution risk, preserve value and enhance deal-certainty,” said Preston. “In the current UK climate – where life-sciences deal momentum remains strong, innovation is accelerating and regulatory complexity is rising – this early-stage advisory is where brokers can truly shine.”

Sources:
¹ https://www.ey.com/en_gl/firepower-report
² https://www.thetimes.com/business-money/companies/article/uk-biotech-eyebio-sold-to-merck-for-up-to-3bn-qcplf89w6
³ https://www.investopedia.com/danaher-buys-abcam-to-expand-its-product-offerings-7866818
⁴ https://www.pwc.co.uk/press-room/press-releases/research-commentary/2024/uk-health-industries-sees-highest-increase-in-deal-value--across.html
⁵ https://www.bioindustry.org/resource/uk-biotech-holds-firm-in-the-first-half-of-2025-bia-report-finds.html
⁶ https://www.bioindustry.org/resource/ai-in-life-sciences-an-evolving-risk-landscape.html
⁷ https://www.fda.gov/news-events/press-announcements/statement-data-accuracy-issues-recently-approved-gene-therapy
⁸ https://www.pharmaceutical-technology.com/features/manipulated-data-novartis-zolgensma/#:~:text=In%20August%2C%20the%20FDA%20accused,Peter%20Marks%20in%20a%20statement

This article is provided for general informational purposes only. It does not, and it is not intended to, provide legal, technical or other professional advice, nor does it amend, or otherwise affect, the provisions or coverages of any insurance policy issued by Travelers.  Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy provisions, and any applicable law.

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