The Pharmaceutical Giants Merge Into Less and Less

Have you noticed how many of the giant drug companies are merging lately?

Just like their buddies in the financial industry they are driven to merge into larger and larger mega-companies. Remember how the mantra of justification for this conglomeration of competing companies used to be rationalized as achieving 'new efficiencies' with the combined forces of the two different companies. At least that was the marketing talk. And like all marketing slogans this one purposefully covers up the truth. You may also recall that when Bush negotiated for the Medicare Part D plans, that now cover prescriptions for the elderly, that he would not allow the government to negotiate prices with Big Pharma because that would 'discourage' all the money they put into the development of new drugs.

They needed that extra cash that grandma and grandpa had to pay out for the "donut hole" to fund the discovery of ever newer and more amazing drugs produced by the white smock wearing heroes with the nerdy glasses that they show in their most earnest commercials.

Unfortunately, just the opposite has happened: when is the last time you heard of a brand new drug? Maybe Chantix, the stop smoking drug that can make people psychotic or Advair which contains a drug shown to increase the risk of death in it's users. Overall there is a trickle of new drugs that are hitting the market. Mostly we have retreads, like Nexium: a reformulated Prilosec, Clarinex which is Claritin, AmbienCR a remade Ambien etc.

These gigantic drug companies will no longer fund the production of a drug that won't automatically make them multiple billions of dollars a year. In other words, the larger these companies get the less motivation they have to shepherd new drugs into production.

Given the advancements in the sciences of molecular biology and genetics that have been achieved in the past two decades, we now have the knowledge to make drugs that exactly mesh with an individual person's genes, but there is not enough financial motivation for Big Pharma to manufacture them. So when you see those commercials again about how much the drug companies need to make to be able to invent new drugs remember that they are lying. They spend the bulk of their budgets on advertising not new drug development. Many new drugs are discovered and very few of them are produced.

The Failure of Big Pharma The Atlantic Business Channel

The Innovation Gap in Pharmaceutical Drug Discovery Kellogg School of Management

RX R&D Myths: The Case Against the Drug Industries 'R&D Scare Card' Public Citizen