Insights & Ideas

Will Merger-Mania Create a New Era of Data-Driven Innovation for Pharmaceuticals?

The pharmaceutical industry is witnessing a bonanza of a time with a near-record of mergers and acquisitions in the past couple of weeks.

UK-headquartered GlaxoSmithKline and US-based Novartis have announced an asset swap plus plans to merge their consumer businesses, while AstraZeneca is considering taking over Pfizer in a $100 billion deal.

These and other deals - including divestitures - are exciting shareholders in an industry that is witnessing difficult times.

Pharmaceutical companies have always faced two very difficult challenges: tight regulation and long and expensive development cycles. It is not unusual for companies to spend 15 years developing a drug at a cost of US$1 billion or more.

Yet, there are other challenges facing the industry: pressures on profit margins and mitigating supply chain risks in a globally interconnected world that means sometimes partnering with competitors, are two of the biggest.

Something has to change: A lot of money is being spent on bankers, lawyers and M&A consultants on major mergers and acquisitions in an attempt to please shareholders.

However, a vital ingredient is being neglected by everyone until after the ink dries on the contracts – integrated data.

This is an expensive mistake, as many of these deals could lead to a new era of innovation, if the disparate data was consolidated and connected to create new and meaningful insight.

Savings & efficiencies shouldn’t only be achieved through the reorganization of staffing levels (as is expected in all M&As) but also through the efficient implementation of a co-ordinated data strategy delivering Data Driven Decision (DDD) making capabilities.

The main reason why the immediate savings that can be derived from data analysis are often overlooked, is due to a lack of understanding about the economic value of data and how (and when) to exploit it.

The reality, is that IT is brought in by the CFO after due diligence with the task of assessing, eliminating and standardizing information management systems and reporting tools: Cost savings at their most basic.

This is where a huge opportunity is being missed: There is no one holistically looking at the huge amounts of data (clinical, customer, product, financial) in each company and determining how best to collectively exploit its use.

This missed opportunity is even larger in the pharma industry, as pharmaceuticals possess some of the most business-rich and societal-benefits based valuable data of any industry. McKinsey estimates that applying big data strategies to better inform decision-making could generate up to $100 billion in value annually just across the US healthcare system.

Surely it’s time for pharma to focus on its data?

In my next post, I’ll be offering top tips on how those undertaking M&As can best use data to create value.

 

Our clients