Consolidation and Innovation in the Pharmaceutical Industry: The Role of Mergers and Acquisitions in the Current Innovation Ecosystem

Recent changes in the pharmaceutical industry have spurred an unprecedented wave of mergers and acquisitions. Some researchers and agencies have questioned whether pharmaceutical consolidation could impede drug innovation. However, as I explain in this Article, these concerns are largely based on an outdated understanding of the drug innovation ecosystem. Whereas a few decades ago almost all drug discovery took place inside traditional pharmaceutical companies, today most drug innovation is externally-sourced from biotech companies and smaller firms. Internal R&D is no longer the primary source, or even an important source, of drug innovation. As a result, analyses that focus on the impacts of pharmaceutical consolidation on internal drug innovation are incomplete and missing the point. Instead, merger analyses should examine whether consolidation increases demand for externally-sourced innovation and, ultimately, strengthens aggregate drug innovation.

via Consolidation and Innovation in the Pharmaceutical Industry: The Role of Mergers and Acquisitions in the Current Innovation Ecosystem by Joanna Shepherd :: SSRN

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s