Is M&A Frenzy Short-Circuiting Pharma R&D?

Pfizer, "the world's premier biopharmaceutical R&D organization," plans to cut research spending by up to $3B reports this Wall Street Journal story. This, says WSJ, is "an attempt to wring efficiencies following its take-over of Wyeth without sacrificing future product development."

But Kenneth "Eric" Milgram, Ph.D., former Director, Systems Biology Technologies at Wyeth, has a different point of view. Dr. Milgram believes that the current merger & acquisition frenzy in the pharmaceutical industry will short-circuit R&D. Of course, Dr. Milgram is not a disinterested party, having been laid off due to the acquisition of Wyeth by Pfizer.

"Why is it that a high-end grocery store like Wegman's can go 94 years without having any layoffs and almost every month you hear about layoffs in the pharmaceutical industry?" asks Milgram.



Here's the answer:

According to a DataMonitor report, twenty-two large-scale M&A events (defined as those valued above $5 billion) will have occurred within Big Pharma over the period 1995 to 2014. In this same period, Big Pharma prescription pharmaceutical sales are forecast to increase from $84 billion to $381 billion. Two-thirds of Big Pharma sales growth over a 20-year period (1995 to 2014) will be driven entirely by M&A activity, according to this report.

But at what cost to future innovation? And at what cost to employee morale?

You can hear Dr. Milgram's opinions about what happens to pharmaceutical companies when they put Wall Street expectations ahead of science-driven innovation in this Live Pharma Marketing Talk podcast interview scheduled for Thursday, February 11, 2010 at 2 PM (Eastern US).

Eric Milgram is a formally trained analytical chemist with more than 10 years of experience in the pharmaceutical and biotech industries. Most recently, he was Director of Systems Biology Technologies for Wyeth, where he managed groups in Collegeville, PA and Cambridge, MA. Eric is currently the owner of Applied Scientific Consulting, which helps clients mitigate technology related risks.

Eric is also and the creator of the Pharma Conduct blog