Pharmaceutical Mergers: What’s the Rush?
Villanova University
College of Commerce and Finance Spring, 2001
MBA 8439 – Contemporary Topics in Finance Dr. W.L. Dellva
Darren Snellgrove
Pharmaceutical Mergers: What’s the Rush?
Drivers of Recent and Future M&A Activity
TABLE OF CONTENTS
i) Executive Summary
ii) Introduction iii) Industry Structure iv) Reasons for Recent M&A Activity v) Analysis of Two Recent Mega-Mergers – Glaxo Wellcome / SmithKline Beecham – Pfizer / Warner Lambert
vi) Do Drug Mergers Really Work vii) Possible Future Mergers viii) Implications of Biotechnology & Genetic Mapping ix) Conclusions x) Bibliography xi) Appendix
i) Executive Summary
OBJECTIVE: Explain what social-political-economic factors are driving the recent step-up in pharmaceutical merger activity, and determine whether or it makes sense.
METHOD:
□ Analyze industry data, focusing on the recent pressures that explain recent merger activity. □ Consider general research and two recent mergers to see whether they are likely to succeed. □ Assess whether this trend will continue.
Industry Stage / Structure □ Relatively mature, and yet constantly changing industry. Complex financial challenges.
Reasons for Recent M&A Activity □ Major drug reimbursement issues, political pressure and concerns over pricing. □ Patent expirations / generic competition. □ Profitable industry, but growth slowing. □ Sales growth issues / global expansion. □ R&D pipeline gaps / R&D synergies. □ DTC campaigns / sales rep. coverage / channel access. □ Biotechnology / Gene Mapping. □ Management greed / agency factors. □ Changing
College of Commerce and Finance Spring, 2001
MBA 8439 – Contemporary Topics in Finance Dr. W.L. Dellva
Darren Snellgrove
Pharmaceutical Mergers: What’s the Rush?
Drivers of Recent and Future M&A Activity
TABLE OF CONTENTS
i) Executive Summary
ii) Introduction iii) Industry Structure iv) Reasons for Recent M&A Activity v) Analysis of Two Recent Mega-Mergers – Glaxo Wellcome / SmithKline Beecham – Pfizer / Warner Lambert
vi) Do Drug Mergers Really Work vii) Possible Future Mergers viii) Implications of Biotechnology & Genetic Mapping ix) Conclusions x) Bibliography xi) Appendix
i) Executive Summary
OBJECTIVE: Explain what social-political-economic factors are driving the recent step-up in pharmaceutical merger activity, and determine whether or it makes sense.
METHOD:
□ Analyze industry data, focusing on the recent pressures that explain recent merger activity. □ Consider general research and two recent mergers to see whether they are likely to succeed. □ Assess whether this trend will continue.
Industry Stage / Structure □ Relatively mature, and yet constantly changing industry. Complex financial challenges.
Reasons for Recent M&A Activity □ Major drug reimbursement issues, political pressure and concerns over pricing. □ Patent expirations / generic competition. □ Profitable industry, but growth slowing. □ Sales growth issues / global expansion. □ R&D pipeline gaps / R&D synergies. □ DTC campaigns / sales rep. coverage / channel access. □ Biotechnology / Gene Mapping. □ Management greed / agency factors. □ Changing
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