Big pharma mega mergers are no way to escape looming loss of exclusivity on key drugs and pressure on prices. In fact, they’re the last refuge of CEOs running out of ideas, reckons Bayer HealthCare’s chief Arthur Higgins.
“I think the tendency is, when you’re short of ideas, to go for a quick fix. It’s a little like myself and a sugar rush. I feel good for about 10 minutes, then I wish I’d never taken the sugar,” Higgins told the Reuters Health Summit. “I can’t see any logic in combining two poorly performing businesses when at the heart what keeps it sustainable is innovation. And there’s no relationship between scale and innovation.“
What’s more, the financial crisis threatens a long-held adage about the drug industry — its defensive status in a downturn — and while prices for acquisition targets may be plummeting, that does not necessarily mean the deal adds up to value.
“Traditionally healthcare has been somewhat cushioned in these economic times, but nobody knows the future any more. We all listen to the television, we all meet with experts, but this is completely outside people’s experience,” Higgins said. “I don’t think any company at the moment is looking at major acquisitions. I think we’re all going to take a pause and step back and look at the economic outlook in 2009.”