What’s driving mergers and acquisitions in pharma industry?
The popular saying ‘United we stand, divided we fall’ is a popular phrase which signifies various aspects of coming together for a common goal or a purpose. This has been a recurring feature for the global pharmaceutical industry as well. As pressures on drug manufacturing, research and development and regulatory aspects have been on the rise because of the competitive business environment in the last decade, the pharmaceutical industry worldwide growth has reached a saturation point.
Avenues for growth have become limited because of declining prescriptions of branded drugs and advent of generic drug products. Further governments of North America and Europe are forced to squeeze their healthcare budgets to the larger masses with cost effective generic products. Branded drug products of the larger pharmaceutical companies face price increases to cover up for the declining margins. All these factors contribute to the rising merger and acquisition phenomenon in the pharmaceutical industry.
Analysts believe that merger and acquisitions are not able to create the value as desired for the merged organisation as they are perceived as source of disruption for the ongoing research and development programmes as well as other critical initiatives. However, the overall benefits of the merger and acquisition strategy supersedes the disruptions at all points. According to analysts, the mergers are critical for the long terms benefits of the pharmaceutical industry and for their short and long term survival. The global pharmaceutical landscape is like a big ocean where the larger fish eats the smaller fish for its survival. In an identical manner, the ecosystem of the pharmaceutical industry works as well.