In recent months we have seen a wave of giant mergers and acquisitions in the pharma industry: Pfizer merged with Wyeth, Merck merged with Schering-Plough, Roche merged with Genentech.
Although these mega-mergers might have been wonderful for the financial industry, did they benefit consumers? Will they be conducive to competition, which will result in new lifesaving drugs and diagnostics?
Or, were these mergers corporate palliatives intended to remedy many failed years of R&D by combining dwindling pipelines and cutting costs, without remedying failed R&D?
You know the answers to all of these questions, and let me predict that in a few short years, several once great pharma companies will devolve into little more than pill marketers. Sad.
And while the Federal Trade Commission permits pharma companies to abandon drug and diagnostic discovery and mutate into pill marketers, it is also allowing the big banks to deviate from their core business of lending money to worthy companies and individuals.
An editorial in today's New York Times , "Even Bigger Than Too Big to Fail", takes the position that "banks that are too big to fail pose too much of a risk to the economy" and that "any serious effort to reform the financial system must ensure that no such institutions exist". I agree with The Times and favor some very strong medicine. My comment, if The Times agrees to post it:
"'If we have learned anything over the last couple of years, it is that banks that are too big to fail pose too much of a risk to the economy. Any serious effort to reform the financial system must ensure that no such banks exist.'
Some banks will always fail, but why allow them to become 'too big' with the attendant risk to the economy? Why enable giant financial institutions to control U.S. economic policy and deviate from their core business of lending money to worthy companies and individuals? Why enable them to pursue quick profit without risk to executive bonuses?
More to the point, was it wise to allow Bank of America to acquire Merrill Lynch? Should Wells Fargo have been permitted to acquire Wachovia? And should JPMorgan Chase have taken over Bear Stearns?
Is there still a Federal Trade Commission? Does antitrust law still exist?
Perhaps it is time to look at the possibility of divestment and fostering financial institutions that serve the interests of small businesses and not the inflated egos of bank management.
Or stated otherwise, perhaps it is again time for many smaller banks that are little enough to fail if they abuse financial norms without significant damage to the economy."
Your write:
ReplyDelete"were these mergers corporate palliatives intended to remedy many failed years of R&D by combining dwindling pipelines and cutting costs, without remedying failed R&D?
You know the answers to all of these questions"
I do not know the answer. How do you know that these mergers happen because of failed R&D? What do you think is the problem with their R&D? Do you mean that it is because they search for drugs in the ligand libraries?
From the Boston Globe:
ReplyDelete"Speaking to about 200 guests at a Sanofi-Aventis research site here, director general Christopher A. Viehbacher, who is based in Paris, outlined a strategy that is becoming common at pharmaceutical giants whose own research and development efforts have slowed: Team up with smaller and nimbler biotechs."
"The pharmaceutical companies have the ability to do clinical studies on a global scale, and they have the deep pockets to finance it. But their internal research and development activity has been relatively poor over the past couple of decades."
http://www.boston.com/business/healthcare/articles/2009/11/11/sanofi_aventis_on_hunt_for_boston_partners/
Note also the closure by Pfizer of several R&D facilities. Merck has also announced that they will be looking for innovation outside the walls of the company.
It is no secret that Big Pharma's pipelines are going dry and that there is much unhappiness with their internal R&D. If you want to improve your pipeline, eliminate unproductive R&D costs, and elimate redundant sales people, a merger is the answer.
Thank you, Jeffrey. It was informative.
ReplyDelete