Article

Mega mergers can't cure the pharmaceutical industry

The pharmaceutical industry needs to pursue R&D collaboration, not giant takeovers.

By Preston Henske and Tim van Biesen

First published on julio 26, 2009
min read


A flurry of major pharmaceutical company mergers and acquisitions got plenty of attention this spring. Pfizer's (PFE) acquisition of Wyeth, Merck's (MRK) purchase of Schering-Plough and Genentech's (DNA) deal with Roche all made headlines for their potential to help the resulting entities reduce costs and add new, promising drugs to company pipelines. But a recent string of quieter agreements that signal collaboration on research and development—as opposed to takeovers—point the way to the real future of the industry. Merck and AstraZeneca (AZN) combined two of their leading pipeline products to develop an innovative cancer therapy, GlaxoSmithKline (GSK) and Concert Pharmaceuticals pooled pipeline assets in part to distribute risk, and Pfizer and GSK combined their HIV pipelines and marketed products into a joint venture to increase their chances of success. These arrangements represent new, promising ways for the industry to make its innovation machine run more efficiently. And they stand in contrast to long-held R&D strategies that focused on out-spending and out-innovating the competition. Drugmakers pursued drug discovery and development on their own, bearing all the risk and reaping all the rewards. But that model is proving unsustainable. Read the full article at BusinessWeek.com.

A flurry of major pharmaceutical company mergers and acquisitions got plenty of attention this spring. Pfizer's (PFE) acquisition of Wyeth, Merck's (MRK) purchase of Schering-Plough and Genentech's (DNA) deal with Roche all made headlines for their potential to help the resulting entities reduce costs and add new, promising drugs to company pipelines.

But a recent string of quieter agreements that signal collaboration on research and development—as opposed to takeovers—point the way to the real future of the industry.

Merck and AstraZeneca (AZN) combined two of their leading pipeline products to develop an innovative cancer therapy, GlaxoSmithKline (GSK) and Concert Pharmaceuticals pooled pipeline assets in part to distribute risk, and Pfizer and GSK combined their HIV pipelines and marketed products into a joint venture to increase their chances of success.

These arrangements represent new, promising ways for the industry to make its innovation machine run more efficiently. And they stand in contrast to long-held R&D strategies that focused on out-spending and out-innovating the competition. Drugmakers pursued drug discovery and development on their own, bearing all the risk and reaping all the rewards. But that model is proving unsustainable.

Read the full article at BusinessWeek.com.