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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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January 23, 2009

Pfizer / Wyeth: They're Going to Take Us All Down With Them

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Posted by Derek

Well, as most of you will have heard, the news this morning is that Pfizer has been in talks to buy Wyeth for several months now. So they must be serious about it, eh? That's been one of the deals tossed around as a possibility, so it doesn't come as a complete surprise. I guess what does surprise me is that the company really is going to continue their amoeboid lifestyle. But then again, what choice do they have?

I've said so much about Pfizer recently that I think everyone here knows my thoughts (and I was recently quoted in the New London newspaper The Day unburdening myself in similar fashion, which should ensure that I'll never get a job at the company). But what am I saying? Who thinks that Pfizer will be doing anything but shedding head count for several years to come?

Update: I have more comment on this, for a non-industry audience over at The Atlantic's new business site, where I'll be contributing some posts on the drug world.

Comments (50) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. lucifer on January 23, 2009 10:42 AM writes...

Wyeth is going to Pharmaciaed by Pfizer, or maybe it will be sugened.. who knows

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2. Don B. on January 23, 2009 10:52 AM writes...

Derek:

Does this mean that pfizer has fired everyone from the last 10-20 companies they have destroyed and need more bodies?

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3. Anon this time on January 23, 2009 11:39 AM writes...

Everyone in this industry should have been fired by Pfizer at least once by now. I know a few people who have been fired twice by Pfizer. They didn't do anything wrong. Just acquired and eliminated.

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4. Anonymous on January 23, 2009 12:39 PM writes...

I understand that a few of the folks that moved to Groton from A^2 have been Pfired. If I where a scientist at Wyeth right now, I would be dusting off the CV, and start looking for another job to be prepared should the merger take place. Pfizers track record is clear on what will happen post takeover.

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5. wattacetti on January 23, 2009 12:40 PM writes...

Well, I guess that's one way for the Big P to get back the $2 billion break-up fee they had to hand over to Stafford when they won the bidding war for W-L.

If it does go through, I wonder if they're going to continue their class act ways and let people know that they get to stay by posting the names on the cafeteria wall.

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6. Hap on January 23, 2009 12:52 PM writes...

If inefficiency is profitable, then more inefficiency must be more profitable! Or perhaps the "positive correlation of company size and CEO pay" rule is being followed.

How do you kill the Blob?

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7. Pat Pending on January 23, 2009 1:18 PM writes...

The Pfizer plan assimilate and eliminate

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8. Ruth on January 23, 2009 1:34 PM writes...

Former W-L ex-chemist here. R&D is a long-term project and American coporate models only look to quarterly, or at best, yearly profits.

My kids love science, but I'm telling them it is a great hobby, and not a stable career.

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9. Ruth on January 23, 2009 1:40 PM writes...

That's 'corporate'.

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10. Jose on January 23, 2009 1:40 PM writes...

"Insanity is doing the same thing over and over again and expecting different results."
Being the borg hasn't helped the bottom line the last ten times, but *this* one is sure to be different! Then cue up that sexy ppt....

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11. Laura on January 23, 2009 1:45 PM writes...

Big Pharma is contracting because it's easier to make a short term profit by cannibalizing units and contraction than creation.

Executives will get their bonuses no matter what the cost. Even when their businesses are essentially destroyed (see the Big Banks), they manage to rake in billions in bonuses.

This is the not so invisible hand of the market place at work. It is a corporate structure created to profit a few executives.

Yet with the exception of this blog, I hear very little about the destruction of chemistry in the popular press.

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12. Larry on January 23, 2009 3:07 PM writes...

Re: Everyone fired at least once by Pfizer.

Does this count? In 2006 the head (or close to it) of Groton HR phoned me gushing about my great qualifications for one of their positions and to tell me about the incipient three-week interview process. The next day I received a boilerplate email rejection. This person refused to answer my reply. A blessing in disguise.

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13. Dr. Manhattan on January 23, 2009 8:55 PM writes...

Much of the below reinforces Dereks' point about R&D productivity not scaling with size. Some comments from analysts on the deal:

"I think it shows their desperation," said Natixis Bleichroeder analyst Jon LeCroy.

"Without a pipeline it doesn't much matter what a company does. Kindler's been there a couple of years now, and the view is not much has been done," LeCroy said. "So this was sort of inevitable if he wanted to keep his job."

Sanford Bernstein analyst Tim Anderson said that was clearly not the way Kindler saw things last year, when he told journalists that large acquisitions "can be very disruptive; it can slow things down and distract people."

"I think it represents a departure from recent policy, because at least all public statements prior to about three months ago were that Pfizer would do bolt-on acquisitions, or product acquisitions, but not a mega-merger," said Sam Isaly, portfolio manager of OrbiMed Advisors, who believes almost all mega-mergers in the past 15 years, including those by Pfizer, have failed to reward investors.

Indeed, Pfizer's shares are trading just above 10-year lows hit late last year.

"Jeff Kindler is the most recent in a long string of losers at Pfizer," said Isaly, who is not one to mince words.

"He really inherited a junk pile. Even so, his board is going to insist that he do something. He doesn't have much more time left, nor should he have much time left," Isaly said of the CEO.

Like Isaly, LeCroy expressed skepticism about whether the deal makes sense for Pfizer.

"I don't think it's going to pay off for them," LeCroy said. "Pfizer's problem was they were already too big, and so just making the company bigger doesn't solve the issue. The real issue is the R&D productivity is not there."

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14. Mike on January 23, 2009 9:56 PM writes...

It's not about Wyeth's pipeline -- it's about their protein mfg capacity.

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15. Dominus on January 23, 2009 11:39 PM writes...

Pfizer is collapsing under its own weight, and taking with them whomever they can grab. It's a move in desperation, and an idiotic one. Their previous mega-acquisitions have had no detectable impact on their R&D productivity (I looked at it). Between 2000 and 2008, they spent $52 billion on R&D, and registered 8 new molecules, only one of which has gone on to become a blockbuster. Bravo! Any moron starting a venture capital fund with that kind of funding would do better. I guess when execs are clueless, they go on and buy someone. It makes them feel relevant. By doing so, they take out perfectly good companies, that would have kept producing their own flow of new drugs, but won't be able to once they are obliterated by the restructuring. And you wonder why the industry's new drug output keeps declining? It parallels the quality of the leadership.

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16. Dominus on January 23, 2009 11:51 PM writes...

Pfizer is collapsing under its own weight, and taking with them whomever they can grab. It's a move in desperation, and an idiotic one. Their previous mega-acquisitions have had no detectable impact on their R&D productivity (I looked at it). Between 2000 and 2008, they spent $52 billion on R&D, and registered 8 new molecules, only one of which has gone on to become a blockbuster. Bravo! Any moron starting a venture capital fund with that kind of funding would do better. I guess when execs are clueless, they go on and buy someone. It makes them feel relevant. By doing so, they take out perfectly good companies, that would have kept producing their own flow of new drugs, but won't be able to once they are obliterated by the restructuring. And you wonder why the industry's new drug output keeps declining? It parallels the quality of the leadership.

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17. Dominus on January 24, 2009 12:33 AM writes...

Pfizer is collapsing under its own weight, and taking with them whomever they can grab. It's a move in desperation, and an idiotic one. Their previous mega-acquisitions have had no detectable impact on their R&D productivity (I looked at it). Between 2000 and 2008, they spent $52 billion on R&D, and registered 8 new molecules, only one of which has gone on to become a blockbuster. Bravo! Any moron starting a venture capital fund with that kind of funding would do better. I guess when execs are clueless, they go on and buy someone. It makes them feel relevant. By doing so, they take out perfectly good companies, that would have kept producing their own flow of new drugs, but won't be able to once they are obliterated by the restructuring. And you wonder why the industry's new drug output keeps declining? It parallels the quality of the leadership.

Permalink to Comment

18. befuddled on January 24, 2009 1:02 AM writes...

Wow, it's amazing the kind of nonsense you can get away with if you're high enough on the food chain. Someone in middle management with Kindler's record would have been gone long ago.

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19. Anonymous on January 24, 2009 7:49 AM writes...

Terrible, terrible news. Pfizer taking yet another productive, reasonably successful company, and completely destroying it. Are there going to be any good companies left in ten or twenty years?

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20. Pfired on January 24, 2009 10:20 AM writes...

Will the last one out the door please turn out the lights?

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21. Ex-Pharma on January 24, 2009 11:27 AM writes...

Pfizer is like a rogue black hole cruising around, sucking in viable companies, and pulverizing them. They've destroyed more than $150 billion in market cap in the last 5 years. That they get away with it only makes sense in the world of finance, and even there only among those too stupid to understand accounting.

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22. LFree on January 24, 2009 11:42 AM writes...

Aside from your productivity of being quoted in The Day, have you been personally research productive in a meaningful way at the company that laid you off?

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23. Hi L on January 24, 2009 12:49 PM writes...

"Pfizer is like a rogue black hole cruising around, sucking in viable companies, and pulverizing them. "

Excellent! But you must put a human face on this tragedy. Pfizer's executives want their massive bonuses at any cost! That's what this is all about.

Destroy a company----get a bonus.

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24. Anonymous on January 24, 2009 3:09 PM writes...

Unfortunately, all our WYE jobs are gone now.
To make this deal work, you have to fire 30,000 - 40,000 people. PFE will protect its own.
The sad thing is, 30,000 - 40,000 WYE employees are about to lose their jobs and there is no one to help us. Its all about the bottom line and we are just so much grist for the mill. In this current economy, it is shameless, nay unpatriotic, to throw 30,000 - 40,000 people onto the unemployment rolls.

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25. Fat Old Man on January 24, 2009 3:10 PM writes...

Anyone from previously affected companies out there that would like to comment how long they think it will take for Pfizer to start shedding employees from Wyeth. I am trying to predict if I will make it to my pension. It could be close.

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26. Dr. Manhattan on January 24, 2009 4:04 PM writes...

"To make this deal work, you have to fire 30,000 - 40,000 people. PFE will protect its own.
The sad thing is, 30,000 - 40,000 WYE employees are about to lose their jobs and there is no one to help us. Its all about the bottom line and we are just so much grist for the mill."

That has been more or less the Pfizer model in the past. But in this case, Pfizer wants to acquire the biotechnology aspect of Wyeth, and that may (and I emphasize may) keep jobs in that area from being cut. Pfizer's current efforts in biotechnology are minor by comparison.

The other potential wild card in the mix is the current Pfizer senior scientific management is poor in every sense of the word. These are the same people whose execrable "leadership" is responsible for the unproductive drug discovery effort at Pfizer. Word on the street is that Mackay got the top job because more accomplished "names" in biotechnology and pharmaceutical research were smart enough to discern the major problems at Pfizer and turn down the offer of CSO from the then new CEO, Kindler. In the end, Kindler was forced to settle. Now, one business strategy is to get rid of the "hatchet" men in layoffs after the painful cuts have been accomplished. This allows new leadership untainted by the deed to set the future course, and healing of the survivors. And, Pfizer just went through a deep round of cuts in scientists two weeks ago, with many senior and accompished people (i.e., drugs to their names) put out the door. The impact on all, including the retained, will reverberate for years. New leadership would allow them to move on more quickly and refocus.

So, it might be that the Wyeth research leadership could be largely retained, with the current Pfizer science leadership team dumped. That would change the complexion of the post merger cuts. It might very well put Pfizer on the long road to recovery as well.

In fact, with regard to the Wyeth science leadership, Kindler would be smart if he looked carefully at them and their accomplishments, and didn't allow his current leadership team to do the choosing of who goes and who stays.

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27. PfizerPhool on January 24, 2009 5:56 PM writes...

FOM: I was acquired along with the one of the mergers,and have so far survived 4 rounds of firings. I don't expect to make the fifth when it comes. We've discussed the possible outcomes in our lab. Of this you can be certain: regardless of productivity, shareholder value, etc., PFE management will act in their own best personal interest. The only reason the labs in Groton still exist is their proximity to where the R&D bosses live. Your location may work to your advantage-the highly paid bosses may actually want to move out of backwater SE CT to metro NYC. Besides, it allows them to (1) close the UK R&D site which currently is problematic since a lot of development activities are located there and (2) close the Groton black hole where $ go in but don't come out.

Of course, it won't make much of a difference in the long run, since PFE R&D managers don't care a wit for doing the difficult science required for new products. The best outcome would be to keep the WYE R&D management-they CAN'T be any worse!

But if the worst happens, I will say that PFE has thus far given everyone the boot with a silver toe.

Permalink to Comment

28. sdnj on January 24, 2009 6:14 PM writes...

Has anyone thought of Wyeth, their unimpressive pipeline, and thought that maybe Pfizer is helping a friend in need? There is a great deal of change ahead as shrinking pipelines, economic downturns, and effects of generics pave way for a difficult path for all pharma.

With recent news about payors who defrauded their customers at time of need, I have started to look at companies like Pfizer as heros for all the contributions they have made. Lets feel some compassion for what lies ahead...not only for them but also for us and the future of our health if they are not successful!

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29. anonymous on January 24, 2009 10:10 PM writes...

sdnj, you CANNOT be serious!

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30. Petros on January 25, 2009 5:03 AM writes...

Pfizerphool suggests that the hatchet men would like to close Sandwich. Now hcih Pfizer site has delivred most of the few succesful drugs that Pfizer has generated internally?

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31. pfizerphool on January 25, 2009 7:20 AM writes...

Petros-In terms of revenue, the legacy Warner-Lambert facility in Ann Arbor, followed by the legacy Searle Skokie facility, and then probably followed by the Pfizer facility in Sandwich. Of course, the first two are long gone. As I indicated, do not mistake productivity for job security.

Permalink to Comment

32. milkshake on January 25, 2009 8:12 AM writes...

Even if the site survives the merger, I expect the effect of Pfizer management will be a terrible loss of morale and productivity.

I interviewed at Agouron in 2000, at the time it was bought by Pfizer - it was not entirely happy place - there was lot of internal rivalries - but they had an impressive achievement record for such a small company. I met the same people four years later when they were taking over our project post merger with Pharmacia and there was a stark contrast with how I remembered them from 4 years ago - these were some seriously dispirited folks. Research-wise their time under Pfizer wing was not a success either. We had overlap in most projects, and it turned out that our handful of mostly Chinese chemists produced far better leads than Agouron people, many having degrees from famous schools.

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33. Escapee on January 25, 2009 9:20 AM writes...

"Pfizer is like a rogue black hole cruising around, sucking in viable companies, and pulverizing them."

After the Warner-Lambert takeover, the Groton scientists adopted a new company motto:

"You will be assimilated. Resistance if futile."

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34. Anonymous on January 25, 2009 2:30 PM writes...

anonymous - I am totally serious! And, I'm a Bush fan.

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35. Hap on January 25, 2009 2:50 PM writes...

"do not mistake productivity for job security"

Nothing seems to be construed with job security, which is the current job model, and works OK. However, if you aren't very productive, and need new drugs, cutting your most productive people seems stupid, unless you think the real inputs to productivity don't have anything to do with those facilities, and can act accordingly. If Pfizer could, they wouldn't be where they appear to be, and would not be doing their best Borg imitation.

As a side note, part of what makes the economic system legitimate is its ability to reward those who do well and not reward those who don't. If people are fired for being productive and their bosses are rewarded for expensive failure, the legitimacy of your system (or at least your management should be questioned.

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36. anon on January 25, 2009 2:53 PM writes...

""To make this deal work, you have to fire 30,000 - 40,000 people. PFE will protect its own."

They kept maybe 10-20% of Pharmacia in 2003. For a while. They moved some of those to --get this--Ann Arbor-- and have been laying off anyone in St. Louis over 45 for a while now.

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37. Insider on January 25, 2009 7:53 PM writes...

This is a desperation move - and not just by Pfizer. Both companies are in dire trouble. One may argue that the quality of research is somewhat better on the WYE side but this is immaterial because mergers of this size destroy creativity and innovation on BOTH SIDES regardless of how the layoffs are structured.

In my personal experience if this merger is real and is approved by both entities and by the SEC and other federal stakeholders - then those 40K people who are going to lose their jobs have about eight months to become portable. Starting NOW. The tricky part is figuring out who has a chance to stay and who doesn't. An easy way to deal with this on a personal level is to ask a simpler question of 'do I want to stay here' and if the answer is 'no' or 'maybe' - assume you're going to be let go and start working on the next career.

Good luck to all of us. Even if PFE-WYE merger does not go through (or is not real) there eventually will be a PFE-XXX merger of similar proportions followed by a string of others like it. Smart money is that of the say 12 major pharma companies in existence now there will be 5 left after 2013.

Permalink to Comment

38. Todd on January 25, 2009 10:33 PM writes...

PFE has a history of unsuccessful acquisitions, but this one may be different because it is the first one being done under the new CEO.

Although I do remember Pfizer saying they were going to devote themselves to Oncology R&D and I don't see why they would be making such a large bet on WYETH when it does very little to advance their oncology research.

Permalink to Comment

39. Insider on January 25, 2009 11:38 PM writes...

Old CEO, new CEO - nothing really changes. Sure they put a show on for the public (the so-called 'new idea' of splitting stuff up into business units) but on a fundamental level the company has the same spirit (or lack of) and culture (ditto) as it had (or rather didn't have) for a long time now.

Eventually this will come to a bitter end but not before we all pay the price. Or do you think that people who run big pharma are somehow fundamentally different from people who made the banking industry what it is today? They all have degrees from the same business schools and most of them have worked for one another in the past...

Permalink to Comment

40. Anonymous on January 26, 2009 12:36 AM writes...

Looks like it is now a done deal:

http://www.nytimes.com/2009/01/26/business/26drug.html

From the article:

"For Mr. Kindler, a lawyer who came to Pfizer from McDonald’s, the deal may be a job-saver."

"Pfizer expects to save $4 billion annually by combining with Wyeth; those savings will be phased in over three years."

"Wyeth’s management team would depart, the people involved in the negotiations said."

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41. Anon on January 26, 2009 7:20 AM writes...

Wow. It's official

http://www.premierbiopharma.com/home.php

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42. befuddled on January 26, 2009 7:49 AM writes...

"In fact, with regard to the Wyeth science leadership, Kindler would be smart if he looked carefully at them and their accomplishments, and didn't allow his current leadership team to do the choosing of who goes and who stays"

Isn't that the problem with someone like Kindler, with very little relevant knowledge and experience? How will he be able to independently evaluate anyone's accomplishments?

Permalink to Comment

43. Anonymous BMS Researcher on January 26, 2009 7:55 AM writes...


40. Anon on January 26, 2009 7:20 AM wrote...

> Wow. It's official

> http://www.premierbiopharma.com/home.php

Yep, I just checked: both www.pfizer.com and www.wyeth.com have the announcement.

Permalink to Comment

44. wyeth employee on January 27, 2009 2:38 PM writes...

what of wyeths nutri infant formula division ? Do Pfizer hold this in any mass ?

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45. Nutri Insight on January 31, 2009 5:10 AM writes...

Nutri will most likely be sold off to j & J, makes sense old relationship with J & J buying Listerine etc now and baby synergies with baby wash and wipes etc...writing is on the wall

Permalink to Comment

46. Duck & Cover on February 2, 2009 2:32 PM writes...

Any idea how Pfizer will handle the OTC division of Wyeth? Allegedly, they want to regain a presence there after selling off their own a few years back (yet another misstep for them).
The hope is that those associated with the manufacturing plants that have already been pared down will be a bit safer (not that anyone is actually safe).

Permalink to Comment

47. srp on February 3, 2009 3:35 PM writes...

The funny/sad thing is I have a 1994 Forbes article about Pfizer where their then-CEO explained why they were not following the herd in buying up a pharmacy benefits management company (as Merck and Eli Lilly had just done). They had a great pipeline and had stumbled on a drug that caused erections (it hadn't been named yet) that they were rushing through development. The CEO deftly punctured the rationale for the PBM acquisitions by his rivals and explained that he could do better disease management by setting up collaborations with hospitals than Merck could by working through Medco. I wonder where it all went wrong.

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48. PfzierdbyWyeth on February 3, 2009 3:40 PM writes...

Wyeth's management being downsized would be the Hand of God working. Those people are dirty. Time to pay the Piper!

Permalink to Comment

49. Braxton on May 4, 2009 6:16 AM writes...

I like it when 95% of the commentary is negative including the reporter. Most of the time 95% of the world is wrong in the first place / Jack Nicholson in Bucket List.

Permalink to Comment

50. telecharger video youtube on May 29, 2013 2:42 PM writes...

You are my breathing in, I own few web logs and very sporadically run out from post :). "He who controls the past commands the future. He who commands the future conquers the past." by George Orwell.

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