The worst deals in drugmaking aren't early or late, just desperate. Everyone who has walked into a grocery store hungry knows how quickly discipline can evaporate. Everything looks like an immediate necessity. The same psychological trap plays out in Big Pharma boardrooms, though the stakes are measured in tens of billions of dollars.

Like shoppers trying to keep the fridge stocked, pharmaceutical chiefs are constantly hunting for promising biotech drugs to replace expiring blockbusters. And just like supermarket shoppers, a CEO who walks into the store hungry—staring down a patent cliff with an empty pipeline—is far more prone to expensive, panic-driven mistakes.

The better move is to make frequent, smaller trips to the store. In pharma terms, that means making a steady stream of small to medium-size bets rather than one gigantic deal. For decades, large acquisitions were the classic answer to a patent cliff. When sales began to drop off because of generic entry, many pharma companies turned to mergers, which added scale and allowed them to strip out duplicative costs.

But several of the more recent large deals, including Bristol-Myers Squibb's 2019 acquisition of Celgene for $74 billion, have failed to deliver positive shareholder returns.