Mergers and acquisitions concentrate the power of pharmaceutical companies and their monopoly on new treatments.

The fight against cancer has become the main business area of ​​pharmaceutical companies, which in 2017 earned more than 96 billion euros with the sale of supposed cancer treatments.

The rush to offer the newest ‘miraculous’ solution to treat cancer also prompted companies to look for profitable mergers and acquisitions to dominate the market.

In 2018, Bristol-Myers Squibb announced the purchase of Celgene for 65 billion euros, the largest purchase in the history of the sector, and Eli Lilly purchased Loxo Oncology for 7 billion.

Purchases and mergers are going to continue. Pharmaceutical giants now have complete departments whose only goal is to look for opportunities to acquire small companies or competitors.

This week, in the J.P. Morgan Healthcare Conference, a reference event in the sector, top executives of Gilead, Merck & Co, and Pfizer recognized it openly.

Companies are focused on mergers and acquisitions, said Robin Washington, CFO of Gilead, while Merck’s CEO, Ken Frazier, acknowledged that in fact, they tried several mergers or acquisitions that they did not complete yet.

Spending on cancer drugs grows a lot because the population ages and there are more and more cancers. This has been Big Pharma’s business model: create customers, not patients.

The elusive cancer cure has never been the goal. The goal has been to create drugs that keep people alive and suffering for many years during which they will need to use pharmaceuticals.

Governments and private health entities are great vehicles for Big Pharma to make their products popular, which ultimately enables them to sell millions of products all over the world.

Their drugs work in such a way that the patient does not die and the disease becomes chronic. People almost never die of cancer, but of some health complication that results from the use of drugs or treatments developed by Big Pharma, such as chemotherapy or radiation, which deplete de human body of its immune system.

In cancer, moreover, there are no two tumors the same and the research advances towards the development of personalized drugs, which are very effective, but that are available to very few patients, which makes the treatment costly and unreachable for most cancer victims.

In some countries, health authorities are more demanding with clinical trials. Fifteen years ago, a drug was approved if it demonstrated efficacy in trials with 300 patients. Now, companies need many more patients, controls, and audits are stricter and the cost of developing a single drug can exceed 1billion euros.

According to a study by JAMA magazine, developing a new cancer drug costs 7.3 trials and 560 million euros on average.

This cost, however, does not take into account the funding of the failed trials, which raises the average cost for a company to launch a new drug to 1.9 billion euros, according to a study by the consulting firm Deloitte, twice as much as in 2010.

The expected return of pharmaceutical R & D, in all therapeutic areas, decreased to 1.9% in 2018, the lowest level in many years. The reason for this is that fewer people have access to new treatments, which makes costs rise.

It is in this situation where Big Pharma’s inherent problem lies: they create drugs and treatments for profit, not to cure disease. If they sought to cure disease instead of only making money, profits would come naturally and their R&D departments would be able to launch even more advanced and innovative projects to prevent disease, as supposed to treat the symptoms.

Sales of anti-cancer drugs are growing at an annual rate of 13%, which will double the companies’ income in 2024, but it will make it difficult for government health programs to pay for them unless pharmaceutical companies lower the costs.

The great challenge is to guarantee access to new treatments. The decision of which is the best treatment for a patient would have to be made by the doctor and patient, not the pharmacy director of a hospital, as it happens now.

Market place monopoly is also a big problem. Five large companies control 60% of sales of cancer drugs worldwide: Roche, Celgene, Novartis, Bristol-Myers Squibb, and Johnson & Johnson.

The difficulty of R&D and its high cost means that companies, large and medium-sized, specialize in therapeutic areas, and that also drives business purchases now. When a company’s product portfolio weakens many of them are forced to buy companies to recompose.

Therefore, Big Pharma started a wave of purchases of biotech companies that specialize in cancer treatments, which already have their products in the most advanced stages of research, very close to going to market.

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