The pharmaceutical industry is characterized by a high level of investment in research and development (R&D), aimed at discovering new treatments and innovative therapies. However, some market strategies can threaten innovation itself. Among these, the phenomenon of killer acquisitions is attracting increasing attention from antitrust authorities and industry experts.
A killer acquisition occurs when a company acquires a potential competitor with the aim of interrupting the development of an innovative drug that could compete with its own products. This phenomenon is particularly harmful to scientific progress, as it reduces the variety of available therapeutic options and limits competition.
The methodology of the study
An analysis of more than 6,300 deals in the pharmaceutical sector between 2014 and 2018 highlighted that approximately 240 deals had potential overlap in terms of therapeutic indications and mechanisms of action. Among these, 183 showed a subsequent interruption in the development of at least one of the drugs involved, while 92 presented elements that suggested the possibility of a killer acquisition.
The study was based on a bottom-up analysis approach, using public data from authoritative sources such as clinicaltrials.gov and pharmaceutical transaction databases. The goal was to identify transactions in which a drug in development was discontinued without clear technical justification.
Main Results
The analysis revealed that:
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38% of transactions with therapeutic overlaps led to disruptions in the development of at least one drug.
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Killer acquisitions were most frequent in mergers and acquisitions (54% of suspected cases), followed by licensing agreements (27%) and asset purchases (33%).
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Many of the discontinued projects involved drugs that were late in development and aimed at highly concentrated markets.
A case in point is Johnson & Johnson’s acquisition of Actelion in 2017. The European Commission identified potential overlaps in insomnia treatments and imposed measures to avoid a discontinuation of the drug ACT-541468. However, development of competitor JNJ-7922 was later abandoned, raising questions about the effectiveness of the imposed remedies.
Implications for the market and regulatory authorities
Killer acquisitions introduce a complex challenge for competition authorities, as the reasons behind development disruptions can be difficult to prove. The analysis suggests that:
- Greater transparency: Greater access to non-public data is needed to better assess the reasons for disruptions.
- Post-acquisition monitoring: Authorities should actively monitor the evolution of acquired drugs, checking whether they are actually developed
- Reform of regulatory instruments: The current regulatory framework, based mainly on the analysis of mergers, may not be sufficient to intercept killer acquisitions that manifest themselves in the form of licensing agreements or R&D partnerships.
Pharmaceutical innovation is a fundamental pillar of public health, but it must be protected from corporate strategies that undermine its progress. The study demonstrated that killer acquisitions represent a real threat to the sector and that current regulatory measures may not be sufficient to counter them.
Competition authorities should adopt more effective tools to monitor the impact of acquisitions on pharmaceutical development and ensure that innovation is not sacrificed for market reasons. Only through more careful supervision will it be possible to ensure that acquisitions in the pharmaceutical sector promote scientific progress and not its suppression.
