Health Care Consolidation Sparks Innovation, Takeda CEO Says Following Mega-Deal

January 15, 2019

By Chloe Aiello

Consolidation in the health care industry won't necessarily raise drug prices, Takeda CEO Christophe Weber told Cheddar, one week after the Japanese pharmaceutical company Takeda acquired Ireland-based drugmaker Shire for north of $50 billion.

"We spend around $4 billion per year in [research and development] and you need a lot of financial muscle for that. That is really what's behind the scale. You are looking for scale to finance R&D. The higher your productivity, the more flexible you will be on the pricing," Weber said.

The acquisition of Shire is the largest foreign buy-out ever executed by a Japanese firm, according to The Economist, and makes Takeda one of the world's largest drug producers. The acquisition gives Takeda greater access to the U.S. market ー it listed on the New York Stock Exchange earlier this monthー as well as to a slate of new drugs in development. Post-merger, the new company is focusing on four different disease types ー gastroenterology, oncology, neuroscience, and rare disease ー and has 21 new drugs in late-stage development.

"It's exciting for us," Weber said.

Consolidation, especially in the expensive U.S. health care system, always invites scrutiny and concern over further hikes. Even political opposites like President Trump and Sen. Elizabeth Warren (D-Mass.) have slammed drug company executives for the high cost of drugs using similar language. Trump has accused pharmaceutical companies of "getting away with murder", while Warren said they are "raking in profits on the backs of patients."

Weber acknowledged that competition is one key to price stabilization in health care, but said rather than contribute to price hikes, his new mega-company will leverage its size to finance research.

"The issue is R&D costs a fortune, and that's why medicines are expensive ー it's because R&D is so expensive. That's really the issue. So we need to work on better productivity, better R&D productivity. We have developed a unique R&D model, I believe, in the company and that's what will give us flexibility in the future," Weber said.

Weber said he sees a future role for technology and biotech companies in health care. They can contribute to innovations ー like gene therapy, for example ー and data collection.

"We need more real-life data, how is a patient doing instead of just clinical trial data, so this is where the tech can help to generate more of this data," Weber said.

For full interview click here.