Almost seven years later, the industry is still experiencing that productivity crisis. And Pfizer just bid $68 billion for Wyeth.<\/p>\n
I admit that I was na\u00c3\u00afve in the ways of business and industry back in 2002, but I have to say that my opinions on mega-mergers haven\u00e2\u20ac\u2122t changed much. As I wrote then:<\/p>\n
My problem with mega-mergers is that, after the pipeline has been temporarily sated (although it remains to be seen whether the original problems with the pipeline are going to crop up again), the buying company is left to integrate tens of thousands of workers, reprioritize drugs in development by both firms, and meet unrealistic sales and savings projections. Typically, this last part is only accomplished by jettisoning a portion of those thousands of workers, creating more short-term disarray.<\/p><\/blockquote>\n
Sure, it\u00e2\u20ac\u2122s possible that the Pharmacia deal would have worked out for Pfizer had Cox-2 inhibitors (like Celebrex and Bextra) not been hammered by Merck’s Vioxx withdrawal, but we can\u00e2\u20ac\u2122t prove a counterfactual.<\/p>\n
So now, as every major pharma company is slimming down, reducing salesforce, closing or selling off manufacturing sites and shuttering labs, the industry\u00e2\u20ac\u2122s biggest player is doubling down by acquiring a competitor that has strengths in small molecule R&D, vaccines\/biologics and consumer health, but also faces patent expirations and an R&D slowdown of its own.<\/p>\n
There\u00e2\u20ac\u2122s been plenty of speculation from analysts and industry figures as to why Pfizer chose to pursue this type of deal, rather than going after small biopharmas and tech-based startups. Is it for the R&D model, the current revenues, the vaccines, the lower-margin-but-more-consistent consumer business? Is it to achieve even greater size? Frankly, I can\u00e2\u20ac\u2122t see much value in being able to say, \u00e2\u20ac\u0153We\u00e2\u20ac\u2122re #1!\u00e2\u20ac\u009d at a time when \u00e2\u20ac\u0153too big to fail\u00e2\u20ac\u009d has become an epithet.<\/p>\n
In the acquisition announcement, Pfizer stated, \u00e2\u20ac\u0153It is expected that no drug will account for more than 10% of the combined company\u00e2\u20ac\u2122s revenue in 2012.\u00e2\u20ac\u009d Given that Lipitor, which currently accounts for 25% of Pfizer\u00e2\u20ac\u2122s sales, will be falling off the board by 2011, it\u00e2\u20ac\u2122s possible they could have achieved this goal without adding Wyeth\u00e2\u20ac\u2122s roster of products.<\/p>\n
A lot of things have changed since 2002, but I still think that mega-consolidation \u00e2\u20ac\u201d in any industry \u00e2\u20ac\u201d rapidly transitions from \u00e2\u20ac\u0153too big to fail\u00e2\u20ac\u009d to \u00e2\u20ac\u0153too big to succeed.\u00e2\u20ac\u009d<\/p>\n
\u00e2\u20ac\u201dGil Y. Roth<\/p>\n","protected":false},"excerpt":{"rendered":"
Here’s my From the Editor column from the March issue of my magazine. Enjoy: Too Big To Fail? The pharmaceutical industry is experiencing a deepening productivity crisis. The industry\u00e2\u20ac\u2122s preferred escape mechanism from this predicament has been to increase investment in current business activities \u00e2\u20ac\u201d primarily R&D and sales \u00e2\u20ac\u201d to sustain productivity levels or, … <\/p>\n
Continue reading “Too Big To Fail?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[27,12],"tags":[172,618],"class_list":["post-3689","post","type-post","status-publish","format-standard","hentry","category-big-business","category-pharmaceuticals","tag-pfizer","tag-wyeth"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p4C7K-Xv","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":2127,"url":"http:\/\/chimeraobscura.com\/vm\/pharma-phunnies-2","url_meta":{"origin":3689,"position":0},"title":"Pharma Phunnies","author":"Gil","date":"July 6, 2008","format":false,"excerpt":"The majority of the Top Companies issue is just about done, dear readers! Still need to finish up some layouts and write the short intros to the two major sections (Top 20 Pharma & Top 10 Biopharma), but the finish line is actually within sight! So I thought I'd take\u2026","rel":"","context":"In "Big Business"","block_context":{"text":"Big Business","link":"http:\/\/chimeraobscura.com\/vm\/category\/big-business"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1333,"url":"http:\/\/chimeraobscura.com\/vm\/say-hello-to-hollywood","url_meta":{"origin":3689,"position":1},"title":"Say hello to Hollywood","author":"Gil","date":"February 5, 2007","format":false,"excerpt":"Derek Lowe writes about a great article in the February issue of The Scientist. The anonymous author discusses the flaws in the R&D model among major pharma companies and develops an interesting method of fixing them: Go Hollywood! Big Pharma continues to follow the old studio model, though there are\u2026","rel":"","context":"In "Big Business"","block_context":{"text":"Big Business","link":"http:\/\/chimeraobscura.com\/vm\/category\/big-business"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":861,"url":"http:\/\/chimeraobscura.com\/vm\/update-7","url_meta":{"origin":3689,"position":2},"title":"Update","author":"Gil","date":"March 3, 2006","format":false,"excerpt":"Sorry I've been out of touch, dear reader. We're closing in on the wedding date (March 12!), and this has necessitated a ton of work at the day job, preparing the April issue of the magazine so that my associate editor can handle what I'm leaving behind. This will necessitate\u2026","rel":"","context":"Similar post","block_context":{"text":"Similar post","link":""},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":334,"url":"http:\/\/chimeraobscura.com\/vm\/phase-0","url_meta":{"origin":3689,"position":3},"title":"Phase 0","author":"Gil","date":"August 4, 2004","format":false,"excerpt":"Neat article in today's NYTimes about changes in preclinical drug testing. That subject matter may not interest you too much, but it's part of my day job, and I have a vested interest in seeing the pharma\/biopharma industry come up with better methods of drug discovery & development.The best part\u2026","rel":"","context":"In "Pharmaceuticals"","block_context":{"text":"Pharmaceuticals","link":"http:\/\/chimeraobscura.com\/vm\/category\/big-business\/pharmaceuticals"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":96,"url":"http:\/\/chimeraobscura.com\/vm\/the-day-job","url_meta":{"origin":3689,"position":4},"title":"The Day Job","author":"Gil","date":"November 4, 2003","format":false,"excerpt":"Here's the editorial for the new issue of the magazine I edit for my day-job. Enjoy:You, Too?In the Pharma business, there's no shame in coming in second. Or thirdHardly seems like four years, but that's how long it's been since we launched Contract Pharma. We started with a November\/December issue\u2026","rel":"","context":"Similar post","block_context":{"text":"Similar post","link":""},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1539,"url":"http:\/\/chimeraobscura.com\/vm\/utilitarianism","url_meta":{"origin":3689,"position":5},"title":"Utilitarianism","author":"Gil","date":"June 6, 2007","format":false,"excerpt":"Every summer, when we get rolling on the annual Top 20 Pharma \/ Top 10 Biopharma report, my trusty associate editor compiles pipeline information for the past year. While I suss out sales figures and try to parse the arcana of accounting, she puts together lists of new drugs that\u2026","rel":"","context":"In "Big Business"","block_context":{"text":"Big Business","link":"http:\/\/chimeraobscura.com\/vm\/category\/big-business"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/posts\/3689","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/comments?post=3689"}],"version-history":[{"count":5,"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/posts\/3689\/revisions"}],"predecessor-version":[{"id":3694,"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/posts\/3689\/revisions\/3694"}],"wp:attachment":[{"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/media?parent=3689"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/categories?post=3689"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/chimeraobscura.com\/vm\/wp-json\/wp\/v2\/tags?post=3689"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}