Pharmaceutical ecological change: Merger and acquisition of start-up companies as a new engine for R & D of large pharmaceutical enterprises

Source: singularity.com in May 4, 2015, Valeant pharmaceuticals of Canada beat endo international of the United States to acquire Salix pharmaceuticals with us $15.8 billion in cash Some may think it's a "game changing" M & A, but in fact, M & A in the pharmaceutical sector has become the norm in recent years Thompson Reuters forecasts that the volume of transactions in the global pharmaceutical sector will reach US $59.3 billion in 2015, the highest level since 2009, with a 94% year-on-year increase With the rapid growth of M & A transactions in this field in recent years, some lawyers working in pharmaceutical companies have become accustomed to it A California lawyer, who has gone through three acquisitions in 18 months, recently joked that he was fired twice by the same company, although he did not work for the company Frequent mergers and acquisitions in the pharmaceutical sector make the industry look more like a "pyramid", with more companies developing drugs at the bottom of the tower and a few big companies making a lot of money at the top This makes many people in the industry think about the impact of this change on the short-term and long-term development of the health care market? Biotechnology has changed the prospects of drug research The market share of many best-selling drugs has begun to shrink recently The development of biotechnology has also overturned the entire concept of drug research and development Pharmaceutical companies are forced to launch new product lines faster than their research and development capabilities For example, a drug used to be considered a small molecule chemical product, and these drugs were very effective at the end of the 20th century But today's drug research focuses on finding new doses, as well as the management and use of current drugs At present, macromolecular biological agents are the real core of drug innovation, and medical equipment has begun to compete with traditional drug therapy A new drug costs an average of $2.5 billion from development to approval, according to a new study Moreover, only a few drugs will become best-selling products (with annual sales of US $1 billion) That means investing in drug research and development becomes more expensive However, with the birth of new technologies, such as molecular models, computer-aided drug development and DNA sequencing, it is helpful to reduce the cost of drug research and development, especially in the early stage For example, a small team of a few researchers can bring an experimental product into phase II clinical, and the cost is much lower than before This means that large pharmaceutical companies do not necessarily have an advantage over small start-ups in the early stages of the drug life cycle However, even if a small company already has an approved product, it is not easy to commercialize it in the United States It is not a new idea that M & A is conducive to the development of commercialization through M & A In the past decade, small and medium-sized pharmaceutical companies such as Gilead, warrand and actiis have been actively seeking acquisitions The changes brought about by these mergers and acquisitions may make the research and development of these small drugs more feasible, but they do not make the commercialization of drugs easier In contrast, large pharmaceutical companies have further strengthened their drug commercialization skills in this process, including strict supervision of drug promotion, patent and exclusive sales rights, tax and compensation After Bayh Dole and the hatch Waxman act were passed, they also knew how to acquire, protect and license intellectual property rights They are also proficient in using long-term regulatory strategies to maximize the commercial potential of drugs Many people think that the quality standard of the market has been improving in the past 10 years, and everyone thinks that a new market has been formed However, the resource advantages of large-scale pharmaceutical manufacturers are highlighted when the products are commercialized out of the laboratory, which small pharmaceutical companies have realized Small biotech companies may have high risks in early clinical development, and large pharmaceutical companies can invest if they see the potential of their products Geely, for example, invested about $11 billion in 2011 to acquire pharmaset, a hepatitis C drug manufacturer At that time, pharmaset's hepatitis C drug was still in the late clinical stage, and now it has become the famous sovaldi Will M & A make the healthcare market better? Although frequent M & A activities may make the employment situation in the pharmaceutical market volatile, new development and commercialization models may be beneficial to the market, which may also be a better opportunity to find new treatment schemes for some diseases that have long plagued people In addition, after the merger and acquisition, the commercialization techniques of large companies can be used to get the drugs on the market as soon as possible Although we do not encourage the frequent integration of enterprises in the industry, every merger and acquisition transaction in the pharmaceutical market may promote the laboratory products to become a commercial drug and enter our medicine box.