The estimated $76 billion merger of British drugmakers Glaxo Wellcome P.L.C. and SmithKline Beecham P.L.C. spells good news and bad news for biotechnology companies, a local expert said.
The Jan. 16 announcement that would create the world’s largest pharmaceutical company comes among extensive consolidation in the pharmaceutical industry. Warner-Lambert Co. in Morris Plains, N.Y., announced Jan. 13 it was in merger discussions with New York-based Pfizer Inc., which would have made it the biggest drugmaker in the world.
Behind the trend of mergers is the increasing pressure for companies to cut costs and boost the number of drugs in the pipeline as profit margins continue to decline, some analysts said.
“It’s another example of the continuing trend within the pharmaceutical industry,” said Joseph Panetta, president of Biocom, San Diego’s industry association for the life sciences.
For biotechnology here and elsewhere, these mega-mergers create greater opportunities for partnerships with biotech firms and thus, life sustaining funding for the development of drugs, Panetta said.
On the flipside, biotech firms with promising drugs in the pipeline will face an even greater challenge to remain independent.
“These large companies have shown they are willing to invest their own research dollars (into biotechnology firms) to develop drugs,” Panetta said.
Along the same lines, as pharmaceutical firms get bigger, more biotech firms with promising drugs are likely to be swallowed by the giants, he added.
, Marion Webb