Spin-outs and demergers - generating shareholder value?

Pharma companies continue to evaluate novel ways to increase their return on investment and generate shareholder value, basic earnings per share (EPS), plus stock price. Historically, pharma has pursued mergers and acquisitions to undermine R&D and drive growth.

According to the NBER during the period 2009 to 2020, the five leading pharma companies acquired more than 70 companies and many of these deals resulted in the development of novel drugs that were reflected in the stock price and shareholder value (Table 1).

Interestingly, recent studies have shown that innovative collaborations and partnerships are more beneficial to pharma R&D projects in spurring new innovations, diversify product portfolios and sharing development risks.