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March 29, 2012
Pfizer: Making the Case for a Breakup
I would not like to count the number of times I've said bad things here about pharma mergers. The best of them, as far as I can see, have been not all that harmful, and the worst have been near-disasters. As the undisputed M&A kings of the industry over the last twenty years, I've been especially hard on Pfizer.
And now that great big financial wheel is turning. Huge mergers and acquisitions appear, finally, to be going out of favor. Since there are no longer reputations to be made, bold visions to be realized, and (don't forget) massive fees to be earned by implementing such moves, the latest word is: breaking up. Spinning off. Leaner, meaner, core businesses, unlocking value, more focus, back to what they do best . .you can write the Wall Street reports as well as I can. Goldman Sachs is out this week making the breathless case for Pfizer doing just this.
I suspect we're in for years of this sort of thing, with Abbott's spinoff of their pharma business now looks like the starter's pistol going off. (They named the new company AbbVie, which I hope they didn't pay someone too much to think up, the same time disappointing the legions of fans who wanted to see it named Costello). Get ready for a long cycle of devolution.
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