Why pharma divestments leak value

Divestment is not the finish line

In today’s pharmaceutical market, divestments have become a strategic tool.

Large organizations are increasingly packaging mature or non-core portfolios and selling them to smaller players. The capital released is reinvested into R&D, while buyers look to optimize supply chains and extract value from established products.

On paper, it’s a win-win. In practice, many organizations underestimate what happens after the deal is signed.

Where value really leaks

The most common mistake in divestments is assuming that signature equals closure.

In reality, signing marks the beginning of a long operational journey. Pharmaceutical portfolios come with obligations that do not disappear when ownership changes:

• Regulatory responsibilities tied to products already on the market
• Quality and pharmacovigilance duties that can extend for years
• Supply commitments that remain enforceable regardless of commercial interest

If these obligations are not fully understood and planned for, value erosion is almost inevitable. Missed milestones, fines, delayed transfers, and reputational damage quickly eat into expected returns, for sellers and buyers alike.

The due diligence gap

Deal teams are often incentivized to close transactions quickly. Operational teams inherit the consequences.

What’s missing is not intent, but depth of due diligence.

True diligence goes beyond financials and contracts. It requires a detailed understanding of:

• How products are manufactured, shipped, and supplied
• The regulatory lifecycle in each market
• How different functional plans interact, and sometimes conflict

Without this, organizations believe they are “out” of a portfolio long before they actually are.

Why execution beats structure

There is no single perfect structure for a divestment.

Some organizations try to simplify future sales through legal entity optimization and consolidation. This can reduce complexity, but only if it aligns with the buyer’s strategy. In many cases, buyers will unpick those structures anyway.

What consistently matters is execution capability:

• Understanding interdependencies across functions
• Stress-testing plans as conditions change
• Iterating, not assuming, alignment

Divestment is not a checklist exercise. It is a lifecycle.

The role of experienced operators

Successful divestments demand people who can think at two levels simultaneously:

• Running the business
• Changing the business

This is where experienced operators make a difference. Having lived through similar transitions, they can anticipate issues that general frameworks often miss, and translate strategy into workable, day-to-day decisions.

In a market that is consolidating fast, this combination of depth and breadth is becoming increasingly rare and increasingly valuable.

This is where a‑connect stands apart. Our consultants combine deep, lived operational experience with the ability to design and execute complex change, bridging the gap between strategy, execution, and day‑to‑day reality.

A divestment only creates value if it is executed as rigorously as it is negotiated.

For organizations on either side of a transaction, the question is no longer whether to divest, but whether they are prepared for everything that follows.

About the author

Taposh Bhattacharya is an Independent Consultant with a-connect, advising senior leaders in the pharmaceutical industry. Specialized in the area of Mergers and Acquisition carve out projects. Managing risks and adapting to issues that come from paths of complex change is where he thrives. Leading complex business and technological change in an international business environment.

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