The last few weeks have seen a lot of acquisition activity among large pharmaceutical companies.
First, Pfizer announced in January that it would acquire Wyeth for approximately $68 billion. This month saw three more mergers: Merck & Co.’s $41.1 billion purchase of Schering-Plough Corp., Roche’s $46.8 billion purchase of Genentech and Gilead Science’s purchase of CV Therapeutics.
Driving much of the consolidation activity is the need to diversify, as big pharma companies continue to wrestle with weak top-line growth prospects, as big blockbuster approvals slow down and generic competition intensifies.
With the economic downturn, many patients are struggling with their medication regimens, often skipping doses, failing to get prescriptions filled or increasing use of OTC products.
OTC products tend not to deliver the kinds of profits that blockbuster prescription drugs do, but they do deliver a steady flow of money into drug companies’ coffers. Merck and Pfizer will both benefit from this, given the strong OTC portfolios of Wyeth and Schering-Plough.
But prescription drug portfolios, many of which face generic competition in the next few years, will benefit as well. Merck’s purchase of Schering-Plough will bring its total of drug candidates in phase 3 testing to 18. Gilead will bolster its cardiovascular drug portfolio, while Roche will gain a whole slew of biotech drugs.
Gilead’s purchase of CV was the smallest, at $1.4 billion, but the other three deals were worth more than $40 billion each. Such large mergers may signify a new era of consolidation among big drug companies as they seek to beef up their portfolios and pipelines.