Impact of Mergers and Acquisitions in the Pharmaceutical Industry

Mergers and Acquisitions in the Pharmaceutical Industry – 2018 is still young and large transactions have already been concluded in the pharmaceutical sector. Analysts also predict several major mergers and acquisitions in the industry for the current year. But in terms of jobs, what are the consequences of such a consolidation of the industry?

French pharmaceutical giant Sanofi has announced the acquisition of American Bioverativ on January 22, for $11.6 billion. Thanks to this purchase, Sanofi adds a string to its bow in speciality medicine, since Bioverativ is a world leader in treatments against hemophilia, a hereditary disease that affects blood clotting.

Buying the outsourcing

“Making acquisitions in the pharmaceutical field is a way to outsource new product development,” says Louis Hébert, professor at the HEC Management Department. “Rather than doing it internally, large companies will buy those that do the development.”
 
There are two reasons why so-called “big pharma” does this – research and development of new products is both expensive and risky. “Why not leave the risk to someone else? If we see that it works, we’ll buy it,” explains Louis Hébert!
 
There is still room for more “traditional” mergers and acquisitions, in other words, consolidation to reduce costs, combine skills and achieve economies of scale, says the expert. “The traditional large pharmaceutical companies are already very consolidated, however,” he adds.
 

Limited job prospects

In developed countries, job growth prospects are limited, according to Louis Hébert.

“In these countries, companies are mostly in efficiency mode. There is even more risk that jobs will be cut,” he says, giving Montreal’s West Island as an example.
 
Jobs are rather going to increase in emerging countries such as China or India. “Growth will take place as well in niche fields, and there again there is not a very large workforce,” says Louis Hébert.
 
This reality should also affect players on the industry’s periphery. “Distributors, for example, are also part of the pharmaceutical ecosystem. They have had good years, but short-term job prospects are also limited, since they are also looking for efficiency.”
 
The pharmaceutical industry is therefore fully mature, before the arrival of major upheavals, such as advanced technologies, which could boost demand, Louis Hébert believes.


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