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Pfizer-AstraZeneca deal could impact drug development

May 3, 2014 at 5:49 PM EST
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HARI SREENIVASAN: Pfizers $106 billion bid for AstraZeneca has been making news this week both because of its size and suggestions that Pfizer is motivated by lower corporate tax rates overseas. But there’s another aspect to the story that Shannon Pettypiece at the Bloomberg news wrote about yesterday: how the possible merger might affect the development of new drugs. She joins us now. So how does the change the pipeline of drugs that are in there for the companies that are involved in these mergers and transactions.

SHANNON PETTYPIECE: Well typically it slows down drug development and a lot of drugs that are in testing now are probably going to get cancelled. If history repeats itself from what we’ve seen in past mergers. and a good example to look at of what’s going to happen with research efforts with one of these big deals is Pfizer’s last mega merger which was when it acquired the drug-maker Wyeth. In that instance, about 4.5bn in research spending got cut, thousands of scientists were fired and about 6 research labs were shut down. And the people who’ve analyzed what happens in this company say these acquisitions can slow down the development of a drug in the process by as much as nine months. and a lot of projects end up actually just getting killed outright altogether.

HARI SREENIVASAN: You know a lot of times the acquiring company says ‘it’s the promising research that’s happening in these little fields that we don’t know about, that’s why we want to buy the company.’ They change their tune after the merger?

SHANNON PETTYPIECE: They always say that, but in Pfizer’s last acquisition and in so many other acquisitions, they often take the stuff that is furthest along in testing, they’ll continue moving that forward. The riskier stuff though, the earlier stage more cutting edge research, often that gets killed, gets terminated. Some areas that one company is pursuing that the new acquirer isn’t interested in, for example asthma or allergies isn’t a big area that Pfizer is interested in. So those programs you know kind of get killed off or die off. So while a lot of times these companies say ‘this has to do with the research,’ what they’re talking about are the drugs that are further along in the development, the more advanced products. and the early stuff, the thing that really has a promise for medicines 10, 20 years from now, that’s the type of stuff that really falls by the wayside here.

HARI SREENIVASAN: And this isn’t just specific to Pfizer. What happens in the larger marketplace. I mean what about those drugs for example in those small instances that might not be very profitable to invest in.

SHANNON PETTYPIECE: Well drug-makers have said that they are interested in doing more work in rare disease. But the fewer companies that we have looking for drugs, the less competition there’s going to be and the more companies are going to say ‘you know we’re just interested in these 6 areas of research’ like Pfizer has. Or you know we’re just interested in cancer, we’re not interested in vaccines. And you know that’s fine when there’s 20 big companies, but when we only have five companies left and one company says ‘you know we’re not going to do obesity research anymore, that’s a little bit too risky.’ You know that’s one less company out of five remaining that are in that area. So it just means less competition and some diseases are just gonna fall of the map. If you have one of those diseases it’s just going to be unfortunate.

HARI SREENIVASAN: Shannon Pettypiece from Bloomberg news, thanks so much.

SHANNON PETTYPIECE: Thank you.