A study released by Burrill & Co finds that the industry's strategy of mergers and acquisitions has failed miserably over the last 10 years, wiping out $1 trillion in value in the process. "The study claims that on December 31, 2000 the combined market capitalisation of 17 of the industry's most active acquirers was $1.57 trillion, excluding Johnson & Johnson," explains PharmaTimes. "By the end of last year, that figure had shrunk to $1.04 trillion, a loss of more than $500 billion in market value." When the $425 billion in acquisitions is added to the number, Burrill & Co. arrive at the $1 trillion figure.
The report also notes that the industry is achieving roughly the same number of new drug approvals despite ballooning research budgets. In comparison, small developers bring more new drugs to market, and do so more efficiently to boot. Small biotech's relative success has forced the industry to reconsider its approach to M&A; instead of buying and assimilating assets, more large developers are taking pains to preserve the innovative cultures of their small acquisitions. And some big developer are also dividing up research into smaller units designed to mimic the small-biotech atmosphere and foster new advancements.
- take a look at the PharmaTimes article