Borrowed Brilliance: Is Pharma Becoming Overly Reliant On Acquisitions?
By Denise N. Bronner, Ph.D.
In many ways, it makes sense for Big Pharma to in-license promising pipeline candidates from smaller companies, effectively using them as an innovation engine and source for pipeline renewal. However, there are downsides and risks associated with overreliance on external innovation. The commentary below provides an argument for, and against, acquisition as a substitute for internal discovery and research; company leaders will have to choose which strategy to pursue at their own organizations.
In Support Of Search & Development: The Pragmatic Future
Pharma companies face growing pressure to deliver groundbreaking therapies while managing skyrocketing costs and tightening timelines. Enter Search & Development (S&D), a strategy that shifts the focus from in-house research to acquiring innovative assets from biotech startups and smaller players. This approach is pragmatic and effective, addressing the critical bottlenecks in drug development.
The advantages of S&D are clear. First, it mitigates the risk associated with the uncertain outcomes of early-stage R&D. By acquiring late-stage assets or those with proof-of-concept, companies can bypass years of trial and error. For example, Roche’s $2.7 billion acquisition of Carmot Therapeutics in December 2024 allowed the company to tap into a promising anti-obesity portfolio without the arduous early development phase.
S&D also leverages the biotech ecosystem, which has become an innovation powerhouse. Smaller firms often excel at disruptive, high-risk research, but they lack the resources for large-scale clinical trials and commercialization. By acquiring these assets, large pharma firms can complement their expertise in navigating regulatory pathways and global markets.
Moreover, S&D promotes a win-win scenario for patients and stakeholders. Patients benefit from faster access to cutting-edge therapies, while investors enjoy a quicker return on investment. S&D isn’t about abandoning innovation; it’s about outsourcing the most volatile aspects of it to entities better equipped for the job.
S&D also positions companies to respond more effectively to emerging health crises. The speed and flexibility offered by acquisitions allow pharma firms to pivot quickly, acquiring the necessary technologies or therapies to address new threats. This agility is invaluable in an industry where timeliness can mean the difference between life and death for patients.
In a fast-evolving industry, S&D reflects a necessary evolution. It enables pharma companies to stay competitive while meeting the urgent needs of patients. By balancing internal R&D with external acquisitions, the industry can strike the perfect equilibrium between speed, cost-efficiency, and innovation.
Against Acquisition: Risky Shortcuts Undermine Innovation
The rise in Search & Development (S&D) in the pharmaceutical industry may seem like a savvy business strategy, but it comes with significant long-term risks. While acquiring external assets offers short-term gains, an overreliance on this approach undermines the foundation of true innovation and creates systemic vulnerabilities.
S&D is often touted as a way to reduce R&D risks, but it merely shifts those risks. Companies that prioritize acquisitions over in-house research become dependent on a limited pool of external innovation. The biotech pipeline is not infinite, and heightened competition for acquisitions inflates costs, as seen in the $14.6 billion Johnson & Johnson deal for Intra-Cellular Therapies Inc. in January 2025, Merck's $10.8 billion acquisition of Prometheus Biosciences in 2023 to bolster its immunology pipeline, and Pfizer's $43 billion purchase of Seagen in 2023 to deepen its oncology portfolio. Search & Development strategies can lead to inflated valuations and unsustainable market expectations. This creates a cycle of hype-driven funding that can collapse when expectations aren't met, damaging both investors and the innovation ecosystem.
This dependency also weakens internal R&D capabilities. When pharma companies allocate resources to acquisitions rather than cultivating their own research teams, they risk losing the expertise and infrastructure necessary for groundbreaking discoveries. Over time, this diminishes the industry’s ability to address unmet medical needs independently.
Moreover, S&D creates a disconnect between the development and discovery phases. Integrating external assets is fraught with challenges, from cultural clashes to misaligned objectives. Integrating these into a different corporate structure can result in regulatory missteps, trial delays, or redundancy in portfolio strategies. These inefficiencies can lead to delays or, worse, the abandonment of promising therapies.
The most troubling consequence of S&D is the stifling of innovation. Internal R&D fosters a culture of curiosity and collaboration that fuels long-term breakthroughs. Outsourcing this to smaller players, who often focus on niche areas, narrows the scope of research and limits the potential for serendipitous discoveries. The rise of S&D incentivizes scientists and entrepreneurs to build with the sole intent of acquisition, rather than long-term development. This shift in mindset can lead to short-sighted science optimized for exits, not impact. In the long run, it draws top talent away from solving big, complex problems and toward fast-follower models.
While S&D may offer short-term advantages, it is no substitute for a robust internal R&D strategy. The pharmaceutical industry must prioritize sustainable innovation over quick wins to ensure its capacity to tackle the complex health challenges of the future. Without a balanced approach, the very essence of what drives medical progress is at risk.
As large pharma companies chase the same few “hot” assets — whether it’s in oncology, rare diseases, or GLP-1s — the industry becomes less diversified. This herd mentality leads to crowding in certain areas while other high-need therapeutic categories (e.g., antimicrobials, CNS disorders) remain neglected.
About The Author:
Denise N. Bronner, Ph.D. has roughly 15 years of organizational thought leadership experience within the global healthcare space and has held various roles in academia, consulting, pharma, and venture capital. During her career, she has specialized in health equity, data-driven global therapy program strategy development, pitch and storytelling refinement, and identifying business opportunities within pharma. Beyond her professional endeavors, she's passionate about enhancing diversity in STEM fields, serving on advisory boards, participating as a judge in pitch/business competitions, and mentoring young professionals. She holds a bachelor’s degree in Biological Sciences from Wayne State University, a Ph.D. in Microbiology & Immunology from the University of Michigan - Ann Arbor, and certification from the Venture Capital Executive Program from UC Berkeley Haas School of Business. She is the founder of Empactful Ventures which currently consults healthcare-focused startups and venture funds. She is a member of the Clinical Leader editorial board, a Board Director for healthtech startup Naviday Health, and a Board Director for the patient advocacy group We Are ILL.