Big may not necessarily mean better if , the world鈥檚 largest pharmaceutical company, buys UK giant .
The announcement that the company is to pursue AstraZeneca, despite being rebuffed in January, comes a week after . The deal strengthened Novartis鈥檚 already pre-eminent position in cancer drug development, and reinforced GSK鈥檚 dominance in vaccines. 鈥淏y doing that, they both played to their strengths,鈥� says John Carroll from the online industry bulletin, .
Frank Orthbandt of FitchRatings in London, a global agency assessing the value of deals, says that this kind of asset swapping is now the industry norm. 鈥淚t鈥檚 too capital intensive to invest across many areas, so it鈥檚 better to be a leader in a specific area, but you need to be sure you鈥檙e going to be world class if you鈥檙e going to swap or buy major assets,鈥� he says.
Advertisement
By contrast, there seems to be less scope for Pfizer to improve its standing by gobbling up AstraZeneca, says Carroll, because neither is dominant in fields where they overlap.
No love for antibiotics
There is little hope that pharma megadeals will do much for neglected medicines, such as new antibiotics and drugs for tropical diseases such as malaria. 鈥淐ompanies don鈥檛 make much money from antibiotics, although some smaller biotechnology companies are developing them,鈥� says Carroll.
Disease-wise, cancer is definitely the hottest area of investment, and this is one area where Pfizer hopes to boost its prospects by buying AstraZeneca. 鈥淐ancer is the big one, as people understand the biology much better and there are startling new drugs coming through,鈥� says Carroll.
At the other end of the spectrum, companies are shying away from areas like depression. 鈥淧eople don鈥檛 fully understand the biology, it鈥檚 very hard to tackle in the clinic with high failure rates, and there are large placebo effects,鈥� he says.
