The Inside Track: M&A is Not the Way to Reinvigorate R&D
I received a call today from GDS International, a UK-based b2b publishing company, alerting me to its annual, event called the Next Generation Pharmaceutical Summit (NGP) currently taking place at the Ritz Carlton on Amelia Island in FL. This invitation only event is supposed to bring pharmaceutical and life sciences executives to discuss problems facing the industry and what thing ought to be implemented to insure continued progress and growth. This is the news coming out of the conference attended by over 50 pharmaceutical and biotechnology executives
Big Pharma concludes that M&A is not the New R&D
With large firms seeking synergies to drive down R&D costs, M&A deals can aid in the transfer of technical knowledge, scalability and reduce time to market. However, previous M&A periods have not alleviated the productivity crisis. “While short term gains emerge from these deals, in the mid to long term, R&D innovation, organic growth, and internal drivers are still key facet’s behind creating a successful company and providing an organization with sustainability.” So says, an executive committee composed of 50 pharmaceutical executives including Jeffery Nye, Chief Medical Officer at Johnson & Johnson, Reinilde Heyrman—VP of Clinical Development at Daiichi Sankyo, Oscar Laskin—VP of Early Development at Celgene are leading the debate, joined by Ann Wang—VP of Clinical Operations at Human Genome Sciences. These sentiments confirm the notion that the pharmaceutical and biotechnology industries are in transition and suggest that life sciences companies still face many serious challenges in the not too distant future.
While increasing mergers and acquisitions isn’t likely to reinvigorate R&D, newly emerging economic pressures have recently triggered another wave of M&A activity in both sectors. But is this the solution for long-term sustainable growth? “The willingness for the industry to unite in such a way clearly demonstrates long-term strategies for improved business processes so long-term investment in R&D can be secured” said Drew Contessa the NPG director.
The NPG will reconvene in April 2010 to review recommendations and actionable items.
The realization that M&A is not a solution to correct waning productivity in R&D was a long time coming. It cost about 150,000 pharmaceutical employees their jobs over the past three years. The idea that companies are beginning to recognize that buying or merging with another company is not a panacea or long term fix is a good thing.
Hopefully, the life sciences industry can learn from its past mistakes.
Until next time....
Good Luck and Good Job Hunting!!!!!!
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There has been no shortage of conversation lately about current problems facing the pharmaceutical and biotechnology industries. These industries are faced with the effects of the global recession because of a dangerous combination of falling revenues and spiraling costs. Life sciences company executives are looking for ways to cut production costs and cope with the current decline in drug sales..jpg)
Oh, what a difference a couple of years or results from a pivotal clinical trial can have on a company’s financial outlook. As you may recall in 2005, Merck was in a shambles after the Vioxx scandal broke. Its CEO was ousted, its stock was trading at less than $35 per share and employee morale was at an all time low. After two short years, Richard Clark, a life-long Merck employee, was able to turn the company around. Merck’s stock reached a high of almost $61 last December and many of its employees were dancing in the streets of Rahway because their stock options were now worth more than the paper that they were printed on. But, like many things in life, all good things must come to an end.
