| The past ten years have proven challenging for | | | | big biopharma. Big pharma is consolidating space |
| the pharma industry, witnessing a large number of | | | | by acquiring past partnerships and alliances with |
| mergers and acquisitions within it. Recently, this | | | | biotech companies. It can be seen that many of |
| tendency has been reinforced with what may be | | | | the acquired biotech companies had partnered |
| called super mergers and acquisitions. It is obvious | | | | before with their acquirer, and current alliances |
| that the financial reality, marked by an economic | | | | make acquisitions easier because of cultural |
| deceleration and credit compression, is behind this, | | | | compatibility and knowledge of the company. |
| but it is not the only important factor. Big pharma | | | | Licensing deals attract acquirers and provide a |
| has been dealing for a long time with issues | | | | revenue source to maintain business activity. |
| regarding patent expiry of blockbuster molecules, | | | | Novel technology, biologics product portfolio and |
| regulatory obstacles, generics competition, under | | | | scientific talent are attractive factors drawing |
| utilization of resources, and declining product | | | | super mergers and acquisitions towards the |
| pipeline due to low R&D productivity, among | | | | pharma-biotech sphere. These advantages, added |
| others. All these factors, along with the current | | | | to the fact that many biotech companies' |
| economic reality, have caused major lowering of | | | | valuation has declined in about 30%, present a |
| stock market values, creating the perfect setting | | | | tempting possibility of acquisition rather than to |
| for super mergers and acquisitions. | | | | try to negotiate complex licensing deals. |
| Most eyes are set on big companies with strong | | | | Besides the super mergers and acquisitions taking |
| drug development channels and low chances of | | | | place within the pharma biotech sphere, many |
| patent expirations, but the real value behind these | | | | biogenerics and biosimilars are expected to enter |
| mergers is still unknown, as, in the past, they | | | | the market in the next years, and big biotech |
| have not shown important additional value in | | | | companies need to add new products to their |
| terms of R&D productivity. In fact, these | | | | portfolios and expand their current lines to stay |
| mergers will produce more mergers and | | | | competitive. These could also become preferred |
| acquisitions activity, because some of the | | | | targets for big pharma. |
| secondary units of these companies may need to | | | | The acquisition of so many biotech companies |
| be parted with. A big plus could be the increase in | | | | makes it difficult for small and medium ones to |
| bargaining capability with payors and government, | | | | make it through, as investors will opt for the |
| making this a strategic move leading to the | | | | acquisition as a safe way out. However, these |
| strengthening of the big pharma family, but not | | | | seldom succeed due to management inefficiency, |
| benefitting the patients. | | | | which must be expert in order to do well at the |
| An additional aspect that is very clear is the | | | | right time and in the right way. |
| move of big pharma to biotech. The blockbuster | | | | It is important to realize that these small biotech |
| model is not expected to disappear, as it has | | | | companies have great capacity to attract the |
| been responsible for turning the pharma industry | | | | best scientific talent because of their flexible and |
| into a high profit margin one. However, it may | | | | entrepreneurial culture, so, any attempt to force |
| shift from a small molecule-based blockbuster | | | | onto them the big pharma work culture will surely |
| model to a biologics based one, since many have | | | | create a clash. These should be kept as |
| seen the huge opportunity behind biologics, and | | | | independent business units and research entities, |
| super mergers and acquisitions have been | | | | while big pharma centers on commercialization. |
| developing activities related to the pharma-biotech | | | | The pharma industry should focus on acquiring |
| field. Also, manufacturing and commercialization of | | | | small and medium biotech companies instead of |
| biosimilars is more complicated than it is for small | | | | uniting into super mergers and acquisitions, saving |
| molecule generic drugs, minimizing the generic | | | | both the struggling biotech industry and pharma. |
| threat for biologics. | | | | If you enjoyed this article, please feel free to |
| One thing is clear, any pharmaceutical consultant | | | | post it to your site or blog and forward this link |
| can confidently state that big pharma is becoming | | | | to your friends. Have a great day! |