M&A as a disincentive to undertaking R&D in the U.S. pharmaceutical industry: Case studies of Pfizer and Bausch Health
Author
Leszko, Bartosz
Term
4. term
Publication year
2020
Submitted on
2020-06-01
Pages
131
Abstract
Mange antager, at store medicinalvirksomheder står for hovedparten af nye lægemidler, men mindre virksomheder driver ofte innovationen i de tidlige faser. For store, børsnoterede selskaber i USA - verdens største og mest profitable marked for lægemidler - er intern lægemiddeludvikling dyr og risikabel. Derfor bruger mange fusioner og opkøb (M&A), dvs. at de køber eller slår sig sammen med andre virksomheder, til at lukke huller i deres forsknings- og udviklingspipeline (R&D) og fokusere på det, de er stærkest til, fx kommercialisering. Specialet undersøger, hvorfor nogle amerikanske virksomheder betragter M&A som en erstatning for intern R&D, og om denne tilgang er holdbar på længere sigt. Med en gennemgang af relevant litteratur og casestudier af Pfizer og Bausch Health identificerer specialet tre hovedårsager: (1) strenge amerikanske godkendelseskrav og relativt korte eksklusivitetsperioder på markedet; (2) aktionærpres på ledelsen for at levere finansielle resultater; og (3) finansielle motiver som at beskytte lægemiddellicenser og begrænse konkurrence. Samlet set giver branchestrukturen og det amerikanske reguleringsmiljø incitament til, at store virksomheder bruger M&A til at stabilisere indtægter og sprede risiko gennem lægemiddeludviklingen.
Many people assume big pharmaceutical companies create most new drugs, but smaller firms often drive early-stage innovation. For large, publicly listed companies in the United States - the world’s biggest and most profitable pharma market - developing drugs in-house is costly and risky. As a result, many rely on mergers and acquisitions (M&A), meaning they buy or merge with other companies, to fill gaps in their research and development (R&D) pipelines and focus on what they do best, such as commercialization. This thesis examines why some U.S. firms treat M&A as a substitute for internal R&D and whether this approach is sustainable in the long term. Using a review of relevant literature and case studies of Pfizer and Bausch Health, the thesis identifies three main drivers: (1) strict U.S. approval requirements and relatively short market exclusivity periods; (2) shareholder pressure on executives to deliver financial performance; and (3) financial motives such as protecting drug licenses and limiting competition. Overall, the structure of the U.S. pharmaceutical industry and its regulatory environment encourage large companies to use M&A to stabilize revenues and spread risk across the drug development process.
[This summary has been rewritten with the help of AI based on the project's original abstract]
Documents