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The Hugely Disruptive Impact of Pharma Mergers

NEWS JUST IN: AbbVie is acquiring Allergan in $63B deal.

Here’s what makes the headlines: The big number. The stock prices. The pipeline strategy. The mega-payouts for C-Suite execs and major stockholders.

Here’s what rarely gets mentioned: the 18 months of hell about to occur for employees and suppliers of both companies.

M&A activity involves a calculated gamble that growth can be achieved, as well as cost savings. Sometimes it works out well. But pop the hood on these events (I’ve been watching for 23 years as a vendor and consultant for commercial life sciences companies), and there’s a ton of turmoil ahead.

Right now, minutes after the announcement, recruiters are warming up their phones to try to poach suddenly-vulnerable talent; employees on both sides are polishing up their resumes; and everyone is about to walk around in month after month of fog and uncertainty as the details of the merger (and the inevitable mass layoffs) slowly get sorted out.

“Will I still have a job?” becomes the new preoccupation. And there will be no answer for a long time.

These scientists, clinicians, marketers, salespeople, and support personnel are your neighbors and mine. They pay taxes, have mortgages, contribute to the community – and now, for many, their lives are partially put on hold.

Dozens, perhaps hundreds of internal initiatives are suddenly halted; some of them years in the planning and execution. Others move forward under a cloud of question marks. Vendor/partners who have been doing great work see their work dry up as yesterday’s full-steam-ahead project grinds to a halt in tomorrow’s fogbank of uncertainty.

Perhaps the combined drug company pipeline becomes richer, but the work pipeline of many suppliers just got poorer – for many, many months. (Except for some big consulting firms. Mergers can be dollar-printing events.) Layoffs aren’t just internal for the companies doing the M&A. The external impacts are rarely discussed, but there is a whole universe of companies, agencies, consultants, and others who support each of these drug manufacturers.

I cannot remember how many mergers and acquisitions I’ve seen over the years. But I can remember the names and faces of many people whose lives have been disrupted – some of them multiple times, as the company they transition to then becomes part of some larger entity a couple years later, etc., etc.

It’s business. It’s capitalism. It’s part of the game, and I understand that. But beneath the headlines, let’s remember – there’s a very human price tag. Good people take a hit. Maybe even your friends and family. Maybe you, my reader. Today, there are thousands of concerned people who just had their worlds shaken up.

If there’s a bright side, it’s this: many of our best emerging new life sciences companies are born out the ashes of these activities. Talent and genius find fresh avenues. It’s always a punch to the gut to read about M&A decisions that will impact people you know. But the next amazing treatment advance may come to the surface in 5 years because of this very event. Here’s hoping…and best of luck to those at Allergan and AbbVie in the long road ahead.

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