As he gives the order not to defend Moscow against Napoleon’s troops and to retreat behind the city, General Kutuzov in Tolstoy’s War and Peace, keeps gnawing on the same bone of a thought: At what point, at what decision, was it already determined that Moscow had to be abandoned. Prior events simply led up to this moment and the actual decision of abandonment had been made long before.
In a very similar way it has been probably like that for Merck’s acquisition of Schering-Plough and Pfizer’s acquisition of Wyeth. Only now are those acquisitions seen as inevitable.
For years, as Pfizer struggled under loss of patents and a dearth of new products from a pipeline that looked something a sluice in the Mojave desert, the company was missing major opportunities in vaccines and biologics. Pfizer knew eight years ago that today would come, in a much sharper clarity than that afforded General Kutuzov. But still the company stuck to its knitting. And the threads separated, the fabric became coming apart. And in one action, Pfizer has jumped into two critical areas that it was never in before. As for Wyeth, it had little coming for it and so, for the sake of shareholder value, it has now run into the arms of a suitor with deeper pockets.
As for Merck, it has done a great job in recent years, overcoming the issues associated with Vioxx. However, even so, the internal growth engine were not enough. And, as for Schering, well that was just a sale waiting to happen. Merck will realize efficiencies by capturing the fullest value of Vytorin, its co-promoted drug with Schering. But that may not be enough.
Look at Pfizer’s lesson. Pfizer acquired Warner-Lambert and got the full rights to Lipitor (which held the ship steady for a number of years) and then acquired Pharmacia to get the full rights to Celebrex (well, that didn’t turn out quite the way it was hoped).
For Merck, Schering may only be a temporary stay until it gets going with something more.
In pharma, the development cycle is long but in an age when blockbusters are just as past as old Russian generals, survival is now couched in more totalitarian terms. The Putins will thrive for awhile and terrorize everyone else in the neighborhood. But until someone expands the playing field of science, delivery and treatment, the industry will continue chewing on that same bone wondering what decision was made years ago that led them to this inevitable moment.
