Whale watch­ing: What a decade of change at Big Phar­ma taught us about cor­po­rate phe­no­types

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Con­front­ed with de­creas­ing R&D pro­duc­tiv­i­ty and scarci­ty of true new block­busters, phar­ma­ceu­ti­cal com­pa­nies con­tin­u­ous­ly seek growth op­por­tu­ni­ties by adopt­ing new or­ga­ni­za­tion­al struc­tures and busi­ness strate­gies. These changes can be dis­tin­guished in­to glob­al adap­tive trends with­in the in­dus­try, such as the de­vel­op­ment of trans­for­ma­tive ther­a­pies for rare dis­eases, and phar­ma-spe­cif­ic ap­proach­es, for in­stance the choice be­tween re­ly­ing on or­gan­ic growth or in­creas­ing part­ner­ing and busi­ness de­vel­op­ment ac­tiv­i­ties.

Un­der­stand­ing the dri­vers be­hind strate­gic changes with­in the phar­ma­ceu­ti­cal in­dus­try is of sig­nif­i­cant in­ter­est to nu­mer­ous stake­hold­ers, in­clud­ing ven­ture cap­i­tal­ists. There­fore, we have at­tempt­ed to cap­ture and ex­plain re­cent key change events for sev­er­al com­pa­nies with­in the big phar­ma league. This “whale watch­ing” ex­er­cise has re­vealed in­ter­est­ing in­sights re­gard­ing the in­dus­try and helped us to iden­ti­fy key be­hav­ioral pat­terns of big phar­ma com­pa­nies.

In our analy­sis, we have stud­ied a rep­re­sen­ta­tive sam­ple of some of the largest multi­na­tion­al pub­lic phar­ma com­pa­nies, look­ing at three key types of events that hap­pened over the past decade: merg­ers and ac­qui­si­tions (M&A), di­vest­ments, and key cor­po­rate de­vel­op­ment events (such as re­struc­tur­ing and strat­e­gy shifts). We have made use of the Glob­al Da­ta and pub­licly avail­able re­sources to com­pile the dataset. Be­low we de­scribe our find­ings and dis­cuss their rel­e­vance in light of the on­go­ing evo­lu­tion of the phar­ma­ceu­ti­cal and biotech in­dus­tries.

Merg­ers and ac­qui­si­tions

Since sev­er­al com­pa­nies (such as Bay­er, J&J or Roche) in our se­lec­tion have busi­ness units or sub­sidiaries that op­er­ate be­yond phar­ma­ceu­ti­cal and biotech busi­ness, we de­cid­ed to an­a­lyze both over­all and phar­ma/biotech spe­cif­ic deal-mak­ing trends. In both analy­ses, cu­mu­la­tive M&A ac­tiv­i­ty with­in our sam­ple was rel­a­tive­ly sta­ble with­in the 11-year pe­ri­od stud­ied, with two no­table dips around 2013 and 2017 and a spike in 2015 (see Fig. 1 and Fig.2)

Fig. 1. Com­plet­ed phar­ma/biotech M&A deals, 2008-2018, ac­count­ed by the an­nounce­ment date

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