Pharmaceutical Company Mergers Dramatically AlterClinical R&D Activity According to a New...

Business/Health and Medical Writers

BOSTON--(BW HealthWire)--June 7, 2000

In an in-depth analysis of 22 pharmaceutical companies that merged between 1988 and 1999, CenterWatch found that clinical research spending and productivity declined sharply during the three years following

In recent years, major pharmaceutical companies have been pursuing mega-mergers in order to build their drug development pipelines and reduce overhead. Recently completed and pending mega-mergers include Astra and Zeneca, Pharmacia Upjohn and Searle, Pfizer and Warner-Lambert, and GlaxoWellcome and SmithKline Beecham.

Results of the CenterWatch analysis show that merged companies curtail R&D spending dramatically during the three years post-merger, as companies trim their drug pipelines. Three years after companies merge, the average number of development projects -- preclinical through phase III -- declines by 34% below cumulative pre-merger company levels according to the CenterWatch analysis.

"This analysis suggests that in the first several years after consolidating, major pharmaceutical companies are not achieving critical productivity objectives," said Ken Getz, President and CEO of CenterWatch. "It is widely recognized that companies will need to double the level of innovation in order to sustain their growth in revenue and earnings. In the short term, mergers are not meeting certain strategic R&D objectives and may even harm the industry's longer-term ability to innovate," he said.

CenterWatch, a Boston-based publishing company that focuses on the clinical trials industry, presents the results of this analysis in the June issue of its monthly newsletter. For the article, entitled 'The Cost of Pharma Mergers on Clinical Research,' CenterWatch interviewed clinical research professionals that had first-hand experience with mega-mergers.

"A number of professionals believe that, in the long run, mergers create better companies," said Annick de Bruin, CenterWatch's Research Manager. "But in the short term, these mega-mergers cause disruptions in internal operations, and project cancellations with contract research organizations and with investigative sites," she said.

For more information, and to order a copy of the June issue of the CenterWatch newsletter, contact Annick de Bruin at 617-856-5956 or visit the CenterWatch web site at www.centerwatch.com.