Mergers in the Pharmaceutical Industry - The Impacts of Mergers on R&D Activities of Large Pharmaceutical Companies

Abstract

The pharmaceutical industry is characterized by many industry-specific conditions that differentiate pharmaceutical firms from other industries. These conditions have motivated large pharmaceutical companies to merge with or acquire other companies in order to develop their capabilities. However, several industry experts and studies show that such strategies have had negative impacts on the R&D activities of firms and their abilities to meet the perpetual need for pharmaceutical products that society demands. The purpose of this report is to develop a deeper understanding into how mergers have impacted Research & Development units of large pharmaceutical companies. Previous studies have been conducted with similar purposes yet from a quantitative perspective. This study will aim to supplement such studies using a qualitative perspective in order to see if there are variables outside those used in previous studies that are significant to the subject matter. A qualitative approach is used to meet the purpose of the study. Primary data has been produced from two perspectives through interviews with industry experts and secondary data has been collected to solidify the analysis in the form of theoretical framework, references to empirical sources, and composed to case studies of recent mergers. Having compared the empirical research to primary data and recent case studies, the authors of this report have found that there is little evidence in congruence between the subjective views of various industry experts. Furthermore, the qualitative approach to a problem well documented and concluded by quantitative studies has questioned the variables and parameters used in these studies. The majority of experts see mergers as necessary tool as pharmaceutical companies transition adapt to the contemporary expectations of the modern industry.