Big Pharma Megamergers Bad for Management, Good for Shareholders

Pharmaceutical companies that have remained among the world’s top 20 largest have all gone through a megamerger with a $10+ billion target company between 1995 and 2005. That sounds like good news, and it is—for the shareholders. On the flipside, such gargantuan couplings tend to wreak havoc on internal management systems, as well as organizational and critical programs; even research and development suffers. It’s because of this regularly negative outcome that most believe mergers within Big Pharma destroy value within the industry. McKinsey & Co. don’t see it that way. In their analysis of 17 deals between 2005 and 2011, the internal disruption is warranted based on the long-term sustainability of the acquirers and positive returns for shareholders.