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Dark side of mergers in Pharma Industry

September 15, 2014
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Former head of Pfizer's Global Research and Development (R&D), Dr. John LaMattina, recently said that the mergers and consolidations within the pharmaceutical industry are badly affecting drug-research as the funds devoted to R&D of new drugs dramatically drops once the two companies start operating jointly.

“Mergers are bad for the medical science and for patients,” Dr LaMattina said, while addressing students of Yale University and pharmaceutical industry professionals at an event. The scientist noted that such deals have reduced the number of pharma companies doing R&D, resulting in dramatic decline in innovation of new drugs.

He cited the 2009 merger of Pfizer with Pennsylvania-based Wyeth Pharmaceuticals to prove his point. Dr LaMattina said that before the announcement of the deal, both the rival companies used to spend almost USD 13 billion on the drug R&D. However in 2013, four years past the USD 68 billion deal, Pfizer spent only USD 6.5 billion on its innovation and drug research wing, former executive of the drug making giant told the students.

“Such a practise forces a company to pick the very best products,” he said, while specifically noting that in the area of oncology, mergers have forced Pfizer to abandon the pursuit of four promising drugs for the treatment of cancer.

From 2000 to 2010, Wyeth's acquisition was one of four major deals that Pfizer Inc made. The company's fifth major deal fell through earlier in 2014, with British drug-maker AstraZenaca.

Dr. LaMattina further said that despite the decrease in drug R&D spending, it is unlikely that government of the United States would interfere to curb the pharmaceutical industry from contracting even further due to such mergers and acquisitions deals.

“The problem is that none of the drug-makers currently has enough market share to make that happen under existing anti-trust provisions. It would require new legislative action and I just don't see any such thing happening,” the Stonington resident said.

In the year 2007, Dr. LaMattina left Pfizer and currently serves the boards of several smaller pharmaceutical companies. Raising alarm over the depleting image of drug-manufacturers in the eyes of consumers, he suggested a series of steps that the companies collectively could take to regain the public trust.

According to him, the companies should practise complete transparency related to payment they make to all physicians; they should make all clinical drug trial data available to the public and last but not the least the television advertising of pharmaceuticals drugs should not be done.


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