Mergers and Acquisition in Big Pharma
When your average consumer is asked their opinion about Big Pharma – large pharmaceutical companies – they may feel ambivalence. They may have a loved one on a regimen of a life-changing, even life-saving treatment, yet simultaneously feel the pressure of mounting healthcare costs. In recent years, pharmaceutical companies – large and small – have merged. Your initial reaction may be, monopoly, less options! However, patient outcomes are more promising. Let’s take a closer look.
Over the last two decades, there have been high-profile instances of Big Pharma reaping enormous profits at the expense of the consumer. While this is certainly an important ethical issue to consider, the reality is, Big Pharma has radically changed life as we know it – raising life expectancy and improving the lives of those with terminal diseases.
One reason for mistrust was Big Pharma’s late 20th century drift from patient care, towards shareholder returns. The preponderance of marketing dollars targeted physicians and drug dispensers – 15 billion USD in 2012 – rather than consumers themselves. The real issue lay with ethical practice in the boardroom. If the Board Chair’s actions were contrary to consumer well-being, the entire organisation’s behaviour would follow by example.
Fortunately, large companies are working their way out of this conundrum now, one that has not been kind to their public image.
Changes are Afoot
Patents on ground-breaking medicines had traditionally lasted 20 yearsafter creation, giving companies an opportunity to realise their investment. However, approval by governmental regulating agencies could last 7-8 years. Arguing that it took about one billion USD to launch a new drug, large companies were “driven” to optimise revenue before their patent expired. What followed was a decade of abuse and “off-label” prescription usage with alleged harmful side-effects. These years were very costly, in terms of public image, patient health, and class-action lawsuits.
There are signs that the days of the maverick drug rep are over. Today, pharma companies are collaborating with other businesses, large and small, to reach the marketplace. In 2015, pharma mergers reached 59.3 billion USD, a 94% increase over 2014. However, shared cost in R&D are making new life-saving drugs a reality, and not only for the developed world.
One example is a Dengue Fever vaccine, Dengvaxia. Having been developed over 20 years, Sanofi Pasteur, and the Philippine National Government have allied to create and implement this life-changing vaccine. In the spring of 2016, over 1 million school children will receive the vaccine. By sharing resources, drug companies are successfully addressing the pressing needs of the developing world.
Another example of this collaborative model is the P5 Partnership: Pox-Protein Public Private Partnership. They are currently developing an HIV vaccine. P5 consists of a broad group of pharma companies, NGO’s, and National governments.
As new virus strains evolve and become increasingly resistant to treatment, few companies are willing to independently develop new products. As pointed out by Mark Kessel of Nature Magazine, “If no pharma company is willing to go it alone, perhaps a consortium could take on the development program… It can also counter negative publicity by being more vocal about altruistic activities, such as philanthropic drug access programs, or other forms of assistance to community and humanitarian causes, including to the developing world.” The P5 is doing just that.
Consolidation is driving patient outcomes, giving better care at reduced cost. Shared liabilities among companies, large and small, are benefiting the shareholders, but more significantly, the most substantive care and value is provided to the consumer – creating a healthier, more sustainable world.