[replicatorblog]

What's missing from this piece is a broader historical perspective. This pattern of conglomeration happens in almost every industry, e.g. the "Big Three" automakers.

It doesn't have to be bad. Seven of the top 10 pharma companies are over a hundred years old. They are highly concentrated. But there's never been a better time to be a biotech startup. Life science startups are going from founding to billion dollar IPO in <18 months. The near lock the big pharma companies have on distribution allows the startups to focus on innovation. It's hard to build a hundred billion dollar drug company today, not so hard to build a mere $1B company.

The same is true in food. Kraft, Mondelez, etc. have huge market power, but are also active in the M&A market, paying $300M for Krave Jerky, $600M for RXBar, and $700M for Blue Bottle—all in the last 18 months or so.

These patterns aren't that different than what we've seen with Facebook acquiring almost all upstart competitors. This isn't great for billion dollar VC funds, but it's not clear at all its bad for entrepreneurs.

[libertyEQ]

It's so common, it's called industry consolidation.

[URSpider94]

Right, but in pharma and food brands, it’s an evergreen process. For the past 20 years, a lot of breakthrough drugs have come out of start-ups. When they get to a certain phase in FDA trials, the winners get bought up by the big players, because nobody in their right mind wants to carry the overhead to ship one drug. Meanwhile, new startups are always forming.

Same with food brands - there are always new food companies shipping a single new product in a hot new market like kombucha, or kale chips, or iced coffee. They build a following and get bought, but new brands are incubating at the front of the trend curve.

The point is, there’s a steady state in some industries where start-ups are better at capturing trends and moving fast, while big companies have the expertise to scale and meet regulatory requirements. One side needs the other.