The Role Of Mega-Mergers In The Future Of The Pharma Industry

The level of merger and acquisition activity that the pharmaceuticalindustry has seen over the past couple of years has eclipsed that of any previous period, said John Ansell of the John Ansell Consultancy, speaking at Pharma Summit '97 in London on January 29-30, organized by IIR Limited. Furthermore, he added, "it is worth questioning whether the resulting industry will be in better shape if merger mania continues."

Mr Ansell said that "it is still too early to tell whether various proposed benefits will arise from the recent mega-mergers that have taken place." Even so, pharmaceutical companies, fearing a drop in rank, appear to be in a frenzy of merger and acquisition activity in an effort to cut costs and gain access to new markets.

Do Mega-Mergers Increase Market Power? While one reason for merging is to increase market power, no individual company holds a market share over 5%, and the combined market share of the top 10 companies is less than 34%. This share has grown over the past 10 years, but if the analysis is expanded to include the top 30 companies, then combined market share would appear to have changed little in the last decade, remaining somewhere in the region of 52% and 57%.