A number of readers have noted this piece by John LaMattina in Nature Reviews Drug Discovery. He is, of course, a former head of R&D at Pfizer, which makes the title of the article something of an attention-getter: “The impact of mergers on Pharmaceutical R&D”. Pfizer, for those of you just returning from a near-lightspeed trip to Alpha Centauri and still adjusting to the effects of relativistic time dilation, has been the Undisputed King of Pharma Mergers over the last ten to fifteen years, growing ever larger and larger in a way that no drug company ever had before. So how has this worked out?
“. . .In this article, it is argued that although mergers and acquisitions in the pharmaceutical industry might have had a reasonable short-term business rationale, their impact on the R&D of the organizations involved has been devastating.
Lest anyone think that he’s trying to make excuses for his former employer, LaMattina explicitly advances Pfizer as an example of what he’s talking about, going over the company’s merger and acquisition history in detail, including research site closure and layoffs. How, he asks, are we supposed to discover new drugs in the face of such cutbacks? And what has been the effect on the scientific health of the industry to have so many fewer organizations there to work on new ideas as they come along?
Good questions. The reaction to LaMattina himself asking them, though, has been varied. My first thought is that I agree with his point of view right down to the ground, and have been publicly inveighing against Pfizer-style mergers for over ten years now for the exact same reasons that he details. (Early next year, in fact, will mark the ten-year anniversary of this blog, which hardly seems possible). All such protests have done nothing, nothing at all, as far as I can tell. Pfizer, up through its acquisition of Wyeth, has getting bigger, buying more companies because it needs their pipelines because now it’s so big, slashing and burning these organzations after buying them, and then turning around and buying someone else because now its pipeline needs shoring up, because for some obscure reason people haven’t been discovering as many drugs as they used to. Yep, that’s about the sorry size of it.
Another reaction, though, has been “How dare someone from Pfizer say that mergers aren’t a good idea? Now he tells us!” And while I can understand that, I think that you have to realize that in a company the size of Pfizer, the head of R&D is not perhaps in as exalted a decision-making position as you might imagine. LaMattina alludes to this here:
“Indeed, R&D seems to be especially vulnerable to the negative impact of mergers and acquisitions. Having a sense of how mergers occur in R&D organizations is helpful for understanding this impact. R&D organizations will be the last part of the companies to begin merger discussions before regulatory approval because of the commercial sensitivity of the pipeline and the intellectual property of the company. . .
I would say that in many of these cases, the job of the R&D executives has been to roll over and take it once the higher-ups have decided an acquisition is going to happen. “Your job is to make this work – and if you don’t want to do it, we’ll find someone that does”. After reading that alarming Fortune piece on the goings-on in the upper ranks of Pfizer, I find this view particularly believable. (And I would find LaMattina’s view on the events in that article extremely interesting, although I doubt we’ll ever hear them).
So, although I don’t want to put words in anyone’s mouth, my take is that LaMattina finds his part in Pfizer’s M&A activities to be regrettable, and that he’s now advancing the arguments against them – arguments that never gained any traction inside Pfizer. His own book skirted the topic – the word “mergers” only appears twice in the text, as far as Google Books can tell. But he’s not skirting it any more.