Larger
companies often have to decide whether to build their business or a
new operation from scratch or buy a company outright, that is, one
already in operation.
Many
companies, especially in the pharmaceutical business, prefer the
acquisition route. It’s expensive because you pay a big premium for
a company after it has developed an expensive new drug.
On
the other hand, if you attempt to research new drugs, with all
startup losses and heartbreak expenses, you have lots of cost as
well.
My
feeling from my observations is this: In the long run, pharma
companies, at least, will pay less for in-house drug product
development; there’s a major premium for successful products. (See
the Earl J. Weinreb NewsHole® comments.)
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