• Home
  • Archive
  • Media Kit
  • Contact Us
  • March 20, 2023

The Madison Times

The Paper That's More Than Black and White

  • News
    • Local News
    • National News
    • International News
    • Sports News
    • Education News
  • Columns
    • Columnists
    • Editorials
    • Letters to the Editor
    • Life Lessons with Alex Gee
  • Events
  • Health
  • Finance
  • Lifestyle
  • Classifieds
  • Community
    • Middle Spread
  • Milwaukee
EXCEPT WHERE INDICATED, THE OPINIONS EXPRESSED ON THIS PAGE ARE NOT NECESSARILY THOSE OF THE MADISON TIMES

What M&A Critics Don’t Understand About Drug Innovation

July 24, 2021

By John Stanford

John Stanford is executive director of Incubate, a Washington-based coalition of life-science venture capitalists. This article originally appeared on InsideSources.com.

The Federal Trade Commission just announced plans to “take an aggressive approach to tackling anticompetitive pharmaceutical mergers.”

Kelly Slaughter, the acting head of the agency, recently blamed the “high volume of pharmaceutical mergers in recent years … [for] skyrocketing drug prices.”

Not only are her actions without merit, but they also imperil the ecosystem that drives drug development and produced the COVID-19 vaccine. Mergers and buyouts are really just another form of partnership, which – just like licensing, joint ventures, or other collaborative arrangements – facilitate the scientific innovation that delivers lifesaving drugs to patients.

Look no farther than the collaboration between American pharmaceutical giant Pfizer and the much smaller German biotech BioNTech. This partnership resulted in the first COVID-19 vaccine authorized for use anywhere in the world.

That joint project began back in 2018. By that point, the husband-and-wife team behind BioNTech had been working for 25 years on a technology for treating infectious diseases using messenger RNA, or mRNA. Recognizing the potential of that work, Pfizer agreed to partner with BioNTech to develop the technology into a flu vaccine.

That influenza inoculation was on track to enter human trials in 2020. But the two firms pivoted once the pandemic emerged, focusing their efforts instead on a COVID-19 shot.

The rest is history.

The Pfizer-BioNTech project isn’t unique. Another pioneer in COVID-19 vaccines, the Massachusetts-based start-up Moderna, also began life as a small venture launched by a group of scientists. It developed its own mRNA technology in collaboration with major pharmaceutical firms like AstraZeneca and Merck.

The reasons for such joint ventures, and mergers and acquisitions more broadly, are covered in middle school economics: specialization of labor leads to maximum efficiency.

Small, privately-backed operations like BioNTech and Moderna excel at early-stage, highly-specialized, R&D. Their investors have a high tolerance for risk. And they pursue lines of research that may never have occurred to the scientists at larger companies. In this way, they serve as incubators for revolutionary medical advances.

But smaller biotechs often lack the considerable resources and manufacturing know-how to turn their ideas into real-world treatments, cures and vaccines.

Conducting clinical trials generally takes years and can cost hundreds of millions of dollars. Navigating the byzantine regulatory approval requires boardrooms of lawyers. And actually mass-manufacturing and distributing a drug requires a level of logistical and engineering expertise that is far beyond the average start-up’s capabilities.

Larger pharmaceutical firms have the resources needed to bring experimental drugs from the lab to the pharmacy shelf. And partnerships, mergers, and acquisitions are the mechanism by which large firms collaborate with smaller biotechs. This deal-making essentially enables a division of labor, allowing firms of all sizes to concentrate on their strengths while shoring up their weaknesses.

Under this system, patients benefit most.

The prospect of a buy-out also gives venture capitalists the confidence to invest in early-stage research start-ups. These investors fund lab and pre-clinical testing, knowing that if an experimental drug shows promise, the start-up may be acquired at a return sufficient to allow the venture capitalist to redeploy those funds into other promising biotech companies.

Partnerships and M&A deals accelerate medical progress, as the response to COVID-19 has made abundantly clear. Blocking this collaboration between big and small firms, and thus making America less innovative, would be the true “anticompetitive” behavior.

Share this:

  • Tweet
  • Email
  • Print

Popular Interests In This Article: Drug Development, John Stanford

Read More - Related Articles

  • Private Sector Investment Fuels Drug Development
  • The Future of Urban Hospitals
  • Communities Look to Hospitals for More Than Health Care
  • Lao Food Box Drives on February 12 and 26
  • Groups, Lawmakers Push to Ease Expungement of Low-Level Criminal Convictions





Connect With Us

Become Our Fan On Facebook
Find Us On Facebook


Follow Us On Twitter
Follow Us On Twitter

Editorials

Karma Chavez
Amanda Zhang
Julianne Malveaux
Benjamin Chavis
George Curry

Journalists

Jacklin Bolduan
Brianna Rae
Aarushi Agni
Rob Franklin
Claire Miller

Topics

Brown Girl Green $
Young Gifted & Black
Universally Speaking
Ask Progress
Civil Rights

Topics

Police Shooting
Police Brutality
Black Lives Matter
NAACP
Racism

Politicians

Barack Obama
Hillary Clinton
Gwen Moore
Paul Soglin
Scott Walker

Contact Us

The Madison Times
313 West Beltline Hwy
Suite 132
Madison, WI 53713
608-270-9470

Copyright © 2023 Courier Communications. All Rights Reserved.
We use third-party advertising companies to serve ads when you visit our website. These companies may use information (not including your name, address, email address, or telephone number) about your visits to this and other websites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here.