It looks this morning like Pfizer is going to try to acquire Wyeth in a ~$70 billion deal.
This is a terrible deal for science, medicine, the pharmaceutical industry as a whole, the employees of the two companies, and the United States.
Wall Street analysts like it. (It makes them look relevant for a few days.)
I explained why it's such a bad deal in length in a diary on Saturday: Obama, Wyeth and Pfizer's Disease.
(The analyst I ridiculed in that post, by the way, has since pointed out in a more recent "note" that the acquisition doesn't really address Pfizer's real problem - though he still loves the deal. Go figure.)
Here's an effort to boil down the problem.
Through past mergers, Pfizer has destroyed something like $150 billion in shareholder value - far more than the company is worth today, killed hundreds of R&D programs, and laid off tens of thousands of people. Run by lawyers and marketers, they've proven they have no idea how to manage R&D.
Yet R&D is not only the lifeblood of the pharmaceutical industry, it's part of the social compact that allows these companies to get away with outrageous pricing, outrageous margins, and outrageous profits -- presumably they are advancing medicine and helping people live longer healthier lives.
Pfizer has become, essentially, like a heroin junkie with an acknowledged problem, that comes up and says "just one more fix - I swear, just one more! - and I'll straighten up and fly right!"
All right son, but this is the last $60 billion I'm going to give you. I mean it!
Except:
- Most heroin junkies can't borrow $30 billion from teetering Wall Street banks.
- Most heroin junkies don't go out and fire 20,000 people after each "fix."
Yes the same banks that the government has just bailed out are using their newfound liquidity to help finance a takeover that's going to result in something like 35,000 layoffs (of which I would bet at least 20,000 will be in the United States), killing dozens of R&D programs and communities.
Rest assured the sales and marketing expenditures at the mother ship will be protected and preserved.
Something tells me that this isn't what they had in mind when they passed the TARP and bailed out those banks.
And I don't think this is quite what Democrats mean when they talk about getting America moving again.
In fact, House and Senate Dems should use this opportunity to hold hearings to examine details of Pfizer's business model and track record.
It all just underscores that passing the stimulus package is only the tip of the iceberg with respect to US priorities. We have a financial and regulatory system that enables greedy finance types and accountants to rove around destroying the productive capacity of the country - blatantly: again, look at Pfizer's track record - with hardly a challenge.