Global pharma saw three big mergers in 2009, driven by the high cost of drug development. Fifteen years later, the strategy is to hive off allied businesses to focus on pure-play innovative medicines
India may be the world’s generic drug capital, but when it comes to pure-play innovation, there is a long way to go
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The year 2009 saw three large mergers and acquisitions between a few of the world’s largest pharmaceutical companies.
Pfizer acquired Wyeth in a deal worth $68 billion with an aim to expand its product portfolio, gain access to Wyeth’s expertise in biotech and vaccines, and increase its presence in emerging markets. Pharma giants Merck and Schering-Plough came together to form a new entity with a strong presence in cardiovascular and respiratory markets, as well as in biologics and vaccines. The deal was worth $41.1 billion. Lastly, in a $47 billion deal, Roche acquired Genentech, known for its innovative work in biotech research. Roche was already a leader in cancer treatments, and with access to Genentech’s portfolio, it developed ground-breaking therapies for cancer. All these mergers and acquisitions were driven by one key factor: High cost of drug development.
Fifteen years later, the strategy has drastically changed—pharma companies are hiving off non-core businesses to focus on pure-play drug development.
One such case study is Novartis. In 2018, the company sold its stake in the consumer health care joint venture to GlaxoSmithKline for $13 billion. Since then, Novartis turned its attention to pure-play innovative medicines. Novartis has also sold off its eye wear business, Alcon; exited its stake in pharma giant Roche for over $20 billion, and spun off its generic medicine arm Sandoz in 2023.
But Novartis isn’t the only one. In 2021, Merck spun out its women’s health portfolio, along with biosimilars and established medicines, into Organon. News reports suggest that Lupin was also likely to demerge its API business, either via a potential listing or a stake sale. Earlier this year, French drugmaker Sanofi was reportedly looking to spin off its consumer business in India. This strategic decision is in line with the parent company’s decision to sell off its entire OTC (over-the-counter) business to focus on innovation, reckon analysts.