Most mergers and acquisitions don't work. With a failure rate anywhere between 50 and 80 percent, they're bad bets usually placed by leaders who've run out of ideas. This one is no different. Betting an important business on a tactic unlikely to succeed won't serve shareholders or stakeholders. Most of the big pension funds own stakes in one or the other or both businesses - so the money at risk is yours and mine.
Britain's economy is poorly diversified. We are too concentrated in financial services and too many sectors in which we previously excelled - manufacturing, engineering, chemicals - have left the country. This leaves us vulnerable to market volatility and increasingly dependent on skills and expertise we've lost. Once gone, this is not easily replaced. Why does the Ministry of Defense spend so much money in the U.S.? Because it has no choice: we no longer make what it needs. When you stop making things, you stop having ideas about making better things. Innovation withers, industries die and intellectual wealth and capacity exits. No chemicals industry, no chemists, no chemistry students: an extinction tougher exams and government rhetoric won't shift.
Size doesn't boost productivity; rather the opposite. One reason biotech startups are so creative is because they are small. Their size attracts and develops creative people who crave autonomy. Smaller organizations tend to generate social capital - the bonds between people that foster trust, resilience, courage and risk taking: all critical ingredients in innovation. Companies don't have ideas; only people do and the greatest motivator of all is a sense of social connectedness: that you matter, that what you do matters. That is what is so easily lost in vast corporations and why, as companies grow in size, they seem to loose their groove. What made them great doesn't keep them great. Great people leave and take their trusted colleagues with them.
Big pharmaceutical companies haven't become more inventive as they've grown. They know this.GlaxoSmithKline's Jean-Pierre Garnier has acknowledged that "declining productivity is at the heart of the industry's decline....The basic philosophy for modern R&D should be to morphing into small in recognition of the fact that critical mass in fundamental research is the size of one human brain."
We had all better not get sick. While science has the capacity to address many of the most pressing issues we face, the failure of all big pharmaceutical companies to introduce new antibiotics has meant that we face a crisis in antibiotic resistance which leading health care officials now deem a national emergency. Sally Davies, the U.K.'s Chief Medical Officer has said "if we don't take action, we may all be back in an almost nineteenth-century environment in which infections kill us as a result of routine operations."
There may be more at stake in this deal than an ideological government is prepared to see. The pharmaceutical industry faces huge challenges that we need it to answer fast and well. Getting bigger won't address any of them; it will only make them worse. What kind of government doesn't care?