Mylan’s long-running takeover bid for Perrigo has failed. After a pitched battle – sometimes descending into outright name-calling – Perrigo fended off Mylan for good. The Mylan-Perrigo story is just a tiny sample of the merger and acquisition (M&A) fever that has gripped the industry over the past few years. Indeed, scores of companies have been racing to secure the best partnerships, hoping to boost growth and fill pipelines. Some companies are pushing for mergers that don’t simply add to their businesses, but instead transform them; an obvious example is Allergan (formerly Actavis). Originally a generics maker, its 2014 buyout of Allergan and subsequent divestment of the original Actavis ‘legacy’ generics business, has enabled its reinvention as a specialty drugs pharmaceutical company. Now there is talk of selling the company to Pfizer in a $100 billion deal...
Where will the M&A juggernaut stop? Will bigger companies swallow up their rivals, until only the strongest – or leanest – survive? Or will falling share prices and tightening tax loopholes eventually dampen enthusiasm amongst investors for corporate mega-mergers? In either case, the current M&A fever will burn out eventually, but what will the outcome be for the industry, its workers and the wider population? In the short-term, takeover bids are rarely good news for drug company employees. Mylan are downplaying the significance of the bungled Perrigo takeover – and though no one likes to fail, another deal will almost certainly come along soon enough. Meanwhile, celebrations at Perrigo are likely to be short-lived for some, given that the company has pledged to cut 800 jobs in the coming months. It remains to be seen whether all this M&A will leave the industry better off in the long term. Could it be that by reducing diversity, the industry risks the very thing on which its survival depends – innovation? The increasing trend towards ‘buying in’ innovation may be necessary to counteract failing pipelines, but if a pharma company is no longer creating new drugs, does it lose something fundamental to its identity? And how will the drug discovery ecosystem cope with that shift? The last round of mega-mergers, at the turn of the millennium, did little to solve big pharma’s pipeline woes…will today’s newly minted deals fare any better?
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