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A new guidebook to the US


The US just doesn’t feel easy any more. This uneasy feeling emanates from all directions, but particularly flowing from top-down and bottom-up. From the top, the president and rest of the federal government convey this sense downward with uncomfortable wrestling of global economic shifts, domestic demand, unemployment, and difficult budgetary equations including rising healthcare costs and burdens. Simultaneously trickling down are business leaders’ clear lack of comfort with federal fiscal debates, resolutions and their intersection with the market dynamics of opportunity and innovation.


From the bottom, there is general sense bubbling up that things have gotten out of control whether it be the result of big government, big business, big global competitive interests, or big shifts in skills required. This also simultaneously leads to a reassessment of where everyone fits in the value chain: a patient, a physician, a pharma company, a payer in a rough-sketch chain in our industry.

Suddenly more than 17% of the US GDP (healthcare spending) went from flying under the radar because a wealthy frontier culture incentivised this rush on resources – to questions at many levels over how such a great swath of spending had not necessarily satisfied its customers while veering out of control. Thus, the US by all accounts increasingly feels like an uneasy market for the pharmaceutical industry – and every large-scale company strategy has a significant thrust into the emerging markets looking for that US-style growth in easier times.

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The road to attractive acquisitions


Pharmaceutical observers often ask, 'what if…' when looking at possible mergers in the life sciences industry. Andy Smith takes this one step further and analyses who has the most to win from being strategically sensible.


The thing about mergers and acquisitions (M&A) between biotech and pharma companies is that you can never see them coming. Fund managers will say that they just invest in the best companies in the hope that an acquirer also recognises their attributes. Sell-side analysts always produce a research piece after a M&A event highlighting the next most likely acquisition target which they just happen to be broker to, but also has most likely been passed over for the company that was acquired.

One of the other aspects of life science M&A is that the transactions almost always seem strategically sensible after the event. Of course, the acquiring company can overpay in order to gain control of the company, as Gilead Sciences did for Pharmasset, but growth investors in particular, can relate to that move. Where investors kick back and sometimes prevent M&A activity, there is usually almost no strategic rationale for the merger.

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The states, not the feds, drive 2012 US Healthcare Reform


As the vortex of healthcare reform swirls over Washington, and the crossfire of healthcare charges between the Republicans and Democrats show little sign of abating, many now assert that until the 2012 national elections are held, no resolution of the new Accountable Care Act will occur. Indeed, some suggest it is the only way the controversial law can be sorted out.


While it is true that the 2010 law could be substantially impacted by the upcoming election, there is also much to suggest that, no matter how the election turns out, practically speaking, US healthcare reform will likely continue forward regardless of the outcome.

Why would I suggest this, especially in the face of those who maintain that should a Republican win for President, and if the Republicans take both Houses of Congress, the Accountable Care Act is kaput? Let's start with the national elections, and head south from there.

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Predictions for next year


"The world’s healthcare systems are in a phase of profound change. We are currently seeing a globally ageing population, the rise of new geographical growth patterns, increasing value requirements in the public healthcare systems and patients and consumers increasingly taking charge of their own healthcare decisions. This is not a temporary “crisis” that will smoothen out and go away. It is a fundamental challenge to big pharma’s business model. Until today, I think that many companies in the industry are still in the process of exploring different approaches of how to respond to these challenges. For me, one of the keys will be to move from a purely product-centred business towards a broader, more value-based approach. As a healthcare company we need to be able to create true value in terms of outcomes within the respective public health systems. In order to achieve this, we need to gradually venture into new business models and systematically start to develop more integrated offerings that centre around creating additional value for the customer."
Dr Joerg Reinhardt, CEO of Bayer HealthCare

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