This article was originally published in Start Up
In this era of pharmaceutical industry consolidation, large pharmaceutical companies, and in particular the newly-merged, taking stock of their increasing bulk, have been heard to say that they will drop products in development that don't have the potential to achieve at least $500 million in revenues. Big pharmas are also looking more critically at their small products already on the market. For these large companies, small products could prove to be a distraction that diverts resources away from potential blockbusters, the kinds of products that the companies will need to grow by 15% a year going forward. In theory, then, as pharmaceutical companies up-average product portfolios in favor of high-revenue producers and prune away redundant or non-strategic products in the aftermath of mergers, many more commercializable products should become available for licensing than ever before. That is the hope, anyway, of a handful of new specialty pharmaceutical companies formed to acquire on-the-market products with the aim of growing their sales through a variety of strategies. These companies avoid product development risk but bear risk of a different sort. To be successful, they must be able to continually acquire products that can grow, and not pay too much for them.
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