Pharma: M&A equals the end of innovation?

KEY IDEA: It’s become easier to simply purchase a rival drug maker than to pour money into R&D.  However, pharma’s worst enemy is its own culture which stymies innovation and rewards sales people who put numbers ahead of patients.

The news that Takeda Oncology was purchasing its neighbor Ariad pharmaceuticals should not come as a shock to anyone,  Takeda has become the typical bureaucratic big pharma company has made a lot of missteps.

Millennium pharma, not too long ago, was listed as one of the “must see” pharma companies at ASCO and was rated high on innovative programs.  They had a great person doing their social media and were connecting with cancer patients all over the web.  Than Takeda tightened its grip on Millennium, first changing the name to Takeda Oncology and instilling a culture of analysis paralysis and all day, back to back meetings.  The result was the loss of a lot of good people and Millennium dropping off the radar at ASCO.

Rather than address the challenges of a stale Japanese culture Takeda decided to go deep in debt and purchase a drug company next store.  It’s only a matter of time before that stale culture spreads to the new acquisition and people start scrambling for parachutes.

The headlines tell us that we should expect a lot of M&A activity in the coming year.  I can’t help but wonder how that’s going to affect innovation.  Along with any M&A comes a heavy debt load and with that more pressure to make the numbers.  Most pharma companies are devoid of good leadership which in turn is causing a lot of people to leave the industry and never look back.

As for the people at Ariad they can expect a lot of late nights, endless meetings and a renewed focus on the balance sheet.