Pharmaceutical industry;; drug pipeline; inorganic growth; medical innovation; merger and acquisitions (M&A); non-core assets; tax inversion; valuation
Abstract :
[en] Introduction: The pharmaceutical industry is undergoing major shifts due to changing macro and micro factors. As the industry is highly capital intensive and patents are expiring, the outlook is on generating inorganic growth, mainly through M&A. Using the income valuation approach, one analyses two completed deals in 2016 above 1bn USD. Thereafter one outlines the main motives behind M&A deals and concluded by discussing whether M&A harms medical innovations.
Areas covered: The paper is based on empirical study questioning existing literature in order to critically analyse valuation and the strategical orientation of pharmaceutical companies
Expert commentary: Pharmaceutical companies understand the changing market conditions and favour their expertise. The restructuring of the industry moves to small niche companies (I.e. Biopharma or biotech companies) researching key innovations and big companies purchasing them to develop them, create clinical trials and distribute them as this is a costly manner
Conclusion: One can expect more M&A deals during the next years focusing on value rather than volume. Pharmaceutical players resilient to the market changes may survive if they change their business model from a traditional vertical one to outsourcing and diversification including external players.
Bruyère, Olivier ; Université de Liège - ULiège > Département des sciences de la santé publique > Santé publique, Epidémiologie et Economie de la santé
Reginster, Jean-Yves ; Université de Liège - ULiège > Département des sciences de la santé publique > Santé publique, Epidémiologie et Economie de la santé
Language :
English
Title :
Critical analysis of valuation and strategical orientation of merger and acquisition deals in the pharmaceutical industry
Publication date :
2018
Journal title :
Expert Review of Pharmacoeconomics and Outcomes Research
ISSN :
1473-7167
eISSN :
1744-8379
Publisher :
Taylor & Francis, United Kingdom
Special issue title :
expert review of pharmaeconomics & outcomes research
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