Big Pharma M&A strategy has failed to build value, says Burrill report

During the past decade large pharmaceutical companies have pursued an aggressive strategy of mergers and acquisition in an effort to grow their businesses. But an analysis from US life-sciences focused venture capital group Burrill & Co suggests the approach has been a failure as these companies have seen the loss of $1,000 billion in value during the past decade.

On December 31, 2000, the combined market capitalization of 17 of the industry's most active acquirers was $1,570 billion, excluding Johnson & Johnson. By December 31, 2010, that figure had shrunk to $1,040 billion, a loss of more than $500 billion in market value. When the combined value of the acquisitions these companies completed during this time - $425 billion - is added, close to a trillion dollars in value has been lost during the last decade, even without taking into account transactions of less than $10 million.

The findings are contained within Biotech 2011-Life Sciences: Looking Back to See Ahead, Burrill & Company's 25th annual report on the biotech industry. The book is now available in print and electronic format at www.burrillandco.com/resources.html.