Pharmaceutical giant Merck is acquiring antibiotics maker Cubist for more than $8 billion. The deal upends conventional thinking in the market: Some 23,000 Americans die each year from infections resistant to drugs, and overprescribing worsens the problem. Yet big drug companies have been exiting the space since it’s not lucrative.
Analysts say the Merck deal may make sense for a few reasons. Drug companies are focusing more on targeted products than blockbusters. Those new antibiotics can shorten hospital stays and persuade insurance companies to pay for them. Federal grants also help companies develop new antibiotics, and more may be on the way. Finally, the scarcity of next-generation antibiotics may help drug makers raise prices.
Click below to hear an interview on the subject with Michael Kinch, director of Washington University’s Center for Research Innovation in Business.
Click below for a longer interview with Jeff Wager, co-founder and CEO of Enbiotix.