M&As continue at a dizzying pace even while so many organizations are just trying to hang on. Apparently some of the biggest firms still have excess money or access to cheap money, and they would rather spend it acquiring than building or solidifying what they have. But if they have so much money, why are they laying so many people off? At a biotech business meeting I recently attended in DC, I kept hearing that “companies have a lot of money.”
But when I followed-up on this point with a panelist, I was told that much of this money could not be used for
operations. Apparently because of the off-shore location, or other locations where it’s hiding, it can only be used to buy stock…
Tag: <span>mergers and acquisitions</span>
I’ve seen little to tell me the major biopharma firms, or the larger supply firms, have learned anything. They’re stuck on the concepts of slashing vital resources—such as R&D and capacity—to “do deals” plus pay executive
bonuses, investment bankers, and hordes of attorneys. As a result, we’ve seen a burgeoning of Business-to-Business (B2B) meetings where the talks are geared toward selling companies and acquisition services. So we continue to see these large firms hoarding cash, acquiring companies, and cutting strategic resources…
Today, thanks to the continued pace of M&As, there are fewer biotech companies, and the desired number of new products just hasn’t materialized. But the real travesty is the loss of the small companies that were creating so many of the highly skilled jobs, and providing the innovation that was driving much of the industry. And what happened to all the displaced workers? Instead of forming partnerships to capitalize on the benefits these small companies had to offer, the acquiring companies had to have it all, or nothing. And unfortunately, too many of them ended up with nothing…
Regarding our current worldwide recession, cheap money and speculation not only hurt the investment and housing industries, but lead far too many organizations in the biotech industry to ignore their core businesses and focus on “growth through acquisition.” As we move into 2008, please help me encourage a return to the principles that built this biotech industry like: entrepreneurship, good science, strong relationships, and innovation. If your company wants to obtain a technology, make an investment or simply license the rights you want. But whatever you do, leave the small companies alone to do what they do best, and what made them attractive in the first place. The value of a company is seldom in its buildings, equipment, products, and IP. It’s in the goodwill that has been built through the value it offers, and the people who created this value…
The pace of M&As hasn’t slowed. It has become next to impossible to keep up with biotech company names, and some organizations can’t tell you what they are supposed to be called. I’m not exaggerating when I say that no one within some of these large organizations can tell you what name you should show in your database, what distinguishes their divisions, or what logo you should show as you give them credit for sponsoring an event or placing an ad…
I bet you are expecting me to rant and rave about M&A-focused business plans and how they are to blame for just about everything that is wrong with the biotech industry. Well, I guess I will a little, but I’m going to take a slightly different approach this time or you’ll probably quit reading my opinion pieces. So why not step back and look at this financial board game a little differently, where you consider employees to be a far better long-term investment than any company or technology you can buy?
Thankfully, recent market fluctuations have made M&As less attractive, and we can see more firms committed to building the businesses they already have, and developing strategic partners instead of acquisition targets. For this issue, I want to address the developments that may mean we are entering some lofty times in the biotech industry…
While I could be deluding myself with wishful thinking, I may be seeing the “new normal” evolving for the biotech industry. The “new normal” may very well be that the mass closing of R&D facilities and the cancellation of major programs is freeing up the CSOs and other entrepreneurs who will start their own companies…