3. Pharma mergers squelch innovation

Drug innovation post-pharma mergers drops faster than Ryan Lochte’s credibility post-Olympics according to a study published by the Harvard Business Review. Researchers analyzed 65 pharma deals and found that innovation declines post-merger, both within the merging companies and among competitors of the new entity. The data show that patenting and R&D spending among competitors drops by more than 20% within four years after the merger. Researchers theorize this innovation decline among competitors occurs because the merger has created one less rival competing in the same therapeutic area. Thus, less push to innovate. With increasing awareness of the impact on innovation, we’ll see if regulators are quicker to put the kibosh on future mergers.

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