Proposed pharmaceutical merger draws sharp criticism

Proposed pharmaceutical merger draws sharp criticism

On Behalf of | Sep 19, 2019 | Mergers & Acquisitions |

The business world has seen a lot of mergers lately. Telecommunications giants are attempting to combine their forces to better compete in a tight marketplace, and banks have merged in an attempt to expand their reach and secure a greater market share. Before each of these mergers is finalized, careful negotiations must be undertaken in order to reach an agreement that is fair for all parties involved. Those businesses that simply fold are likely to be taken advantage of to the detriment of their owners, their employees, and their customers.

Yet, there is another consideration that must be made when merging: public perception. In many instances, consumers hardly bat an eye at the mention of two companies combining into one. Sometimes, though, the businesses involved, the goods and services in play, and the power acquired by the newly formed company causes them concern. This can work against the companies that are looking to merge as they can take a ding to the reputation and goodwill they have fought to secure.

Two pharmaceutical companies may be in that position now. AbbVie and Allergan, two of the world’s largest drug makers, are currently trying to finalize a $63 billion merger that would make it he fourth biggest pharmaceutical company in the world.

Many people and organizations, including the American Federation of Teachers and Public Citizen, oppose the deal due to concerns about the power that will be held by the new company. Since the merger would diversify each company’s drug offerings, consumer groups are concerned that the drug maker will then have too much control over drug pricing which, to them, is already out of control.

Of course, not all mergers will be subject to antitrust scrutiny as is the case here. Yet, public opinion matters. When consumers feel that a company has gotten too big and powerful, they can turn on it, thereby causing unintended and unwanted consequences. To best ensure that a merger meets a business’s needs and furthers it best interests through a carefully negotiated agreement, Baton Rouge area business can turn to their trusted legal professionals.