A new wave of consolidation

Mergers are in the air: Pfizer/Wyeth, perhaps Roche/Genentech and possibly others? Stock market analysts are talking about ’a new wave of consolidation’ in the industry. Are they right? And if they are, is this a good thing - and even if it is, is it a good thing for chemists?

First off, I’m not so sure about the idea of a ’wave of consolidation’. I think that’s trying to impose a pattern on events that may not have much of a pattern at all. The fortunes of drug companies’ rise and fall is largely due to the number of drugs they discover, and if there’s any inevitability in that process, I’ve certainly missed seeing it! No, this talk of waves and of the natural evolution of the drug industry doesn’t ring true.

Pfizer’s problems may not be unique, but they’re uniquely large. No one has ever tried to replace a drug as big as Lipitor, and no drug company has ever been as large as Pfizer. The solutions they hit on, then, don’t have to be the ones that the rest of the industry need follow. In fact, I don’t think that their latest merger solution is one that Pfizer itself should follow. One of the German philosopher Friedrich Hegel’s more intelligible (or at least translatable) comments was that ’the only thing we learn from history is that we don’t learn anything from history,’ and Pfizer seems to be spending a huge amount of money to prove him correct.

But that said, there may well be companies that feel that growing larger is the solution to their problems. The shareholders will demand that something is done, and merging with someone else is, if nothing else, a big decisive move. But it is the effect on the ecosystem of the industry that worries me. I think we need as many different varieties of drug discovery as possible, and when companies merge, some of our intellectual diversity is lost. That affects the number of different compounds being investigated as well as the number of diseases being investigated and the mechanisms being targeted to treat them.

Size matters 

A large company may think it is big enough to use a number of different approaches, but in reality, homogeneity always works its way down from above. The first reason for this is that a company is not going to compete with itself any more than it has to; it will take projects only as far as necessary to declare a winner. That generally won’t be as far as a competing organisation would go. You might think that a big organisation would have enough room in it for lots of projects, but the tendency is always to staff up the most promising ones to make them move more quickly. This happens in almost all organisations; it’s just the scale that changes. 

Medicinal chemists caught in a merger need to be ready for these things. The two companies involved may have different methods for starting programmes, and different criteria for staffing them and advancing compounds to the clinic. But after a merger, in each case, one of those processes is going to win. One of the hardest things about a merger is that questions can be left unanswered for months, leaving researchers wondering what’s going on and if they’re wasting their time. 

Cracks in the pavement 

Is there a bright side to all this? The immediate effects of these big mergers on research staff are mostly bad ones. People and departments are suddenly made redundant - and the ’lucky’ ones who stay have to face a great deal of disruption. If my ecosystem analogy is correct, the larger companies may well be leaving a number of possibilities uninvestigated. Make no mistake, a bigger company will always feel as if it needs bigger drugs to keep it going. But in the scramble to get blockbusters to market, many useful (and profitable) smaller products may well be missed. 

It may look at times as if the drug discovery landscape is being paved over by huge machinery. But there are places that the asphalt will miss, and cracks will always form over time. With any luck, some very interesting things may start to grow there - and I think it’s in the best interest of the whole industry that we do what we can to make that happen. 

Derek Lowe is a medicinal chemist working on preclinical drug discovery in the US