Saturday, January 31, 2009

The Pfizer-Wyeth Merger - We Were Wrong – They are WRONGER

OK, I was wrong, but there is no mea culpa needed. The Pfizer (NYSE: PFE) and Wyeth (NYSE: WFE) deal has been announced and somehow financing was arranged. The hubbub in the media seems to support my opinion that this a bad deal for Pfizer’s shareholders, especially if you’re one of the 19,000+ employees who will likely lose their job in this deal. (Wanna bet that after President Obama gets through bashing banks for paying out $18 billion in TARP funds for bonuses, he’ll be setting his sights on Big Pharma.) Although, Jeff Kindler may still be trying to put a positive spin on things. Jeff better be good at spin meistering with a 50% reduction in Pfizer’s dividend-anyone notice that after an initial run up, both PFE and WYE retreated rather significantly based on some on Wall Street who don't view this merger as a layup after all.

Mike Huckman’s been busy doing the post-game review on this deal. Check out his blog ( ), in particular, his January 27th and 28th blogs. He offers some interesting perspectives and also links to a Wall Street Journal analysis of the deal. Other than the companies themselves and their hired flacks, I haven’t come across any serious commentators who think that this is a good deal.

I’m going to keep sticking my neck out on this one though. The virulent press reaction and Kindler’s ability to keep the financing together for this deal are my two main reasons.

First, the press reaction. Pfizer is simply buying revenue (at a very high price we add) to offset its looming loss of Lipitor to the generics. Kindler’s been trying to keep his job and has been shuffling assets around in a corporate finance version of three card monte. More people are going to be looking at this deal and start questioning it. I don’t expect anyone to be riding to the rescue with a counteroffer. Anybody remember Boston Scientific (NYSE: BSX) and Guidant? Let’s see, how many billions in overvalued assets did Boston write off the other day? Many pundits (and we agree) think that Pfizer would have been far better off buying several biotechnology companies (e.g., Biogen-Idec, Gilead, Genzyme or as we have advocated Amgen all would have helped) and why justify re-entering the Consumer business when two years ago, Kindler and company claimed they were selling the Pfizer Consumer business to J&J (NYSE: JNJ) so they could "focus' on Pharmaceuticals.

Next, let’s talk about that bank financing. I haven’t come across any details about which financial institutions or investors are behind the $22.5 billion in external financing or its terms. In these times of credit crisis, I’m sure that they are very interesting. By the way, another $47.5 billion will come from internal financing. One commentator noted that Pfizer would probably have to repatriate offshore cash to help with the deal. I suspect that this could mean paying US corporate taxes. Again, not a great deal for shareholders. Given the lack of value that deal produces along with the job losses noted above, I wonder if banks might start rethinking their loan arrangements. Sooner or later, Washington, DC is going to start asking what’s happening with all the money being forked over to the financial services sector. Executive bonuses and job losses don’t seem like a good return for taxpayers’ money. Somebody’s going to start paying attention here.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Wednesday, January 28, 2009

Wrapping Up the Indian Outsourcing Industry – For Now

I’ve been blogging about the Indian outsourcing sector for the last few blogs and I’m going to wrap it up with this one, at least for a while. I'm sticking with my point of view that all this questionable business will have an impact on Life Sciences companies considering and/or using these companies in conjunction with their outsourcing/globalization programs. I want to wait until after second quarter earnings come out and see where the big four Indian outsourcers are at before I continue blogging.

I have a few reasons for wanting to conduct a temporary cease fire about the outsourcers:

First, I want to write about other topics. A lot’s happening in the world right now, especially in the life sciences sector, and one thing I like about this gig is being able to research and write about different topics.

Second, some of the events that I’ve been blogging about are still unfolding. Satyam is a case in point. There’s a new board of directors trying to figure out how to plug the hole left in the balance sheet after over a billion dollars or so disappeared from it. Then there’s trying to figure sort out all the potential suitors circling Satyam like sharks around an overboard sailor. According to Business Line, iGate Corp is purportedly interested. Given the current state of the global banking industry, Satyam may have trouble obtaining short term financing. If clients beginning to leave then the cash needs will become even more desperate. I think by early summer something’s going to have to give on that one.

Next, the expanding global recession is going to start hurting the customer base. Large outsourcing deals are expensive. Positive payback, either return on investment or discounted cash flow, generally takes two to three years at best for large projects. So, new large projects probably won’t be coming down any too soon. That means that future revenue growth will be off. Throw in stiffer competition squeezing profit margins and here’s another industry in trouble. Don’t be so smug sitting there, thinking that I don’t know what I’m talking about. I’m old enough remember the computer timesharing business. That was pretty hot for quite a while before it imploded. Sure, different times, different circumstances, but, the end is the same, highflyers streak across the sky like shooting stars and burn out as quickly.

Finally, with every major economy on the planet struggling to put their unemployed back to work, shunting jobs offshore won’t be viewed as a patriotic duty. I’ve blogged earlier about President Obama campaigning on keeping jobs here in the US. He may actually agree with the Republicans on this, or, at least enough in the Houses of Congress to pass his legislation. But, this too will take some time. Also, those healthcare executives who will suddenly rediscover their patriotism may also be worried about the risk arising from terrorism and be somewhat reluctant to move too many jobs overseas for the time being.

So, these are my reasons for leaving India for a few months. I’m confident that will be a lot more to write about in the six months or so.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Monday, January 26, 2009

Pfizer and Wyeth – What’s in for Pfizer’s Shareholders?

This week stories began circulating about a potential merger between Pfizer (NYSE : PFE) and Wyeth (NYSE: WFE). Larry’s already written about what it could mean for the pharmaceutical industry if it happens. I’d like to focus on what it means to Pfizer’s shareholders. Personally, I think that it’s nothing more than a defensive ploy on the part of Pfizer. I refer my readers to my January 5th blog of this year for my thinking on large life sciences mergers and acquisitions given the current financial climate.

In this week’s Barron’s, correspondent Jacqueline Doherty writes in the Follow-Up section about the proposed deal and she offers an interesting analysis. I find one point particularly interesting. Acquiring Wyeth would give Pfizer the over-the-counter products Advil and Robitussin. Didn’t Pfizer recently sell off some very valuable consumer products to Johnson & Johnson (NYSE: JNJ)? Sounds like management is a bit confused if you ask me.

Acquiring Wyeth will probably dilute Pfizer’s earnings for some time. How long? I don’t know and I haven’t seen anything published yet. But, it’s a reasonable expectation. Doherty suggests that a combined firm would still have Pfizer’s earnings down by 11% from the prior year. I suspect that we have yet another management buying earnings. Why it should work here when it hasn’t anyplace else, I don’t understand.

Pfizer’s dividend yield is respectable (Barron’s states 7.2%), but, two things about this. First, above normal dividend yields, especially in times like these, normally indicate some sort of market risk. Next, how much longer will this dividend continue? Even General Electric (NYSE: GE) has had to cut its dividend! Depending on how Pfizer finances this deal, the dividend might be at risk. Normally once safe healthcare brands are not as recession-proof as they once were. Johnson & Johnson is learning this to its own chagrin. Of course, there’s the possibility of good things to come from Wyeth’s pipeline. Just how realistic is that though?

Pfizer’s CEO, Jeffrey Kindler, appears to be struggling with what to do. I don’t want to criticize him. He’s in a tough spot like every Big Pharma CEO today. A big acquisition would build momentum and excitement in the press and buy time in the hopes that something, anything, happens outside in the real world. Kind of like what the Federal government and Big Auto are doing, huh?

I’m still not convinced that deals like Pfizer and Wyeth are nothing more than hype being churned by people anxious for a story, any story, to add some pizzazz to what is an otherwise bleak market situation. From a shareholder perspective, this isn’t a god long term play. No, I really don’t think that we’ll see these deals happen. (And, even if announced, completing the financing is another story for another blog.)

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Friday, January 23, 2009

Pfizer-Wyeth-Are We Kidding? If Not, Who and What is Next??

A Pfizer Wyeth Merger—Are We Kidding? If not, Who's Next??

This morning, January 23rd, The Wall Street Journal “speculates” that there have been talks between Pfizer and Wyeth about a combined company, although they quickly point out that there is nothing imminent. My colleague Guy de Lastin recently wrote in this blog that there isn't a rational business reason for big pharmaceutical company mergers this year and has been notably supported in The Journal with "The record of big mergers and acquisitions in big pharma has just not been good. There's just been an enormous amount of shareholder wealth destroyed," said Gary Pisano, a Harvard Business School professor who has written about the issue.

Admittedly there are contravening forces at play here-Pfizer among others has been notably non-productive in its R&D sector spending over $7.5 billion a year with little tangible payoff—in fact they announced 800+ layoffs for this particular group in the last week or so. On the other hand, Wyeth has had a bit more success with a newly re-engineered R&D organization—having said that, both companies have major blockbusters, Lipitor and Enbrel come from acquisitions, not in house development. Clearly there are enormous “synergy targets” should two such massive businesses merge. Combine these factors with an investment community that is pushing for consolidation, and a lower market cap this year than last mixed together with a cash position of over $25 billion for Pfizer and a market capitalization of just over $50 billion for Wyeth—maybe, just maybe this could happen.

If Pfizer-Wyeth becomes a reality, we enter a new realm of what we call “Super-Mega-Global” Pharmaceutical giants. This may force other merely mega-globals into a merger frenzy. Europe's big 3, Glaxo, Novartis and Sanofi may view the world in a different way and look in their backyards at the likes of AstraZeneca, Bayer and even Roche as feeding fodder. How about the likes of Merck, J&J, Abbott or BristolMyers looking over the landscape at each other or such potentially delectable morsels as Amgen, ScheringPlough or others or each other or some large generics, or...... You get the point, in an industry known for follow-the-leader mentality, the investment bankers, lawyers and our friends the consultants are in for some major paydays.

Contributed by Larry Rothman

Thursday, January 22, 2009

Tata, Last Man Standing?

Recently, I’ve blogged about the issues at Satyam and Wipro, two key suppliers to the Life Sciences industry. I’ve also written about the implications for Indian outsourcers. I’ve suggested that there may be a consolidation coming in the sector. The question that I kept asking myself is who could be among the survivors? We think this can be a crucial issue for the Life Sciences Industry as they seek lower costs, equal or better quality of services and trustworthy/ethical partners.

One potential candidate could be Tata Consultancy Services (TCS). So far, they have avoided the scandals associated with its competitors. (At least so far, who would ever have thought that Goldman Sachs would become a mere commercial bank?) In fact, Tata recently announced the acquisition of Citibank Global Services Limited for a cash price of $512 million US. In addition, TCS gained a contract worth $2.5 billion US for nine and a half years providing process services to Citigroup. The deal was announced in late December. Looks like someone is coming up a winner.

By no means do I think Tata will be the sole surviving large Indian outsourcer. I divert momentarily to mention one of India's premiere companies, Infosys. A very recent article in Motley Fool ( ) endorses the longer term viability of Infosys with the following commentary: "While accounting scandals at Satyam (NYSE: SAY) and Wipro (NYSE: WIT) are making Indian IT consulting firms look like Enron in a sari, Infosys carries the torch with a steady hand. The third quarter of 2009 saw sales grow 8% year over year to $1.17 billion, and earnings per ADS jumped from $0.55 to $0.58. Of course, nobody would call the entire nation corrupt, but you have to admit that the steady-as-she-goes success of Infosys makes the Foolish heart beat a bit more strongly". More about Infosys another time, so for now let's get back to Tata (TCS).

Could TCS be the last man standing in the Indian outsourcing sector? We give it a definite perhaps/maybe. Picking up some of the better pieces from the US financial meltdown is one way to expand market share. Some of Satyam’s customers might be swept up by TCS in the fall out that sure to come. While Wipro’s misdeeds might seem like venial sins (OK, I admit it, I went to parochial school.) by comparison, I think clients, especially "ethical" pharmaceutical companies may be looking for a new outsourcer might be a little reluctant to get mixed up with another vendor evidencing signs of ethical lapses.

Hence, Tata. Satyam’s existing clients, if they decide to switch, or, are forced by a financial collapse, would have to move quickly to replace their service provider. There is a question as to whether or not TCS would have the capacity to take on all of Satyam’s existing business. Or, would the usual suspects, IBM and Accenture or an Infosys be rolled out. Rest assured, they’ll be trying to move in, hard and fast.

2009 will probably be the crucial in determining if Tata will be the last man standing in Indian outsourcing. First, we have to see how Satyam comes apart and how fast. Next, we have to see where the pieces go. Finally, we have to learn whether Indian outsourcers were a brief moment in the history of outsourcing and offshoring that fell victim to the large multinational outsourcers when they could no longer sustain themselves.

Against this backdrop, other factors need to be considered, terrorism, the standoff between India and Pakistan, and the eventual shrinkage in the cost of doing business between India and the rest of the world, primarily, the United States. The time difference alone will ensure that absolute savings will not be the only factor.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Monday, January 19, 2009

President Obama and US Jobs – What Happens Next?

We have a new President, Barack Obama. “Things” have changed and will continue to do so. What I want to blog about today is what this could mean for US jobs, in particular, in the life sciences sector.

Big Pharma has been offshoring the jobs of its employees for years now. Sometimes, to third party vendors, sometimes through the fiction of captive centers. Either way, jobs have left the country. Also, let’s not forget all the cash that some of them keep offshore to avoid US taxes. A lot of investment and jobs could be funded with it.

President Obama ran and was elected on keeping and creating jobs in America. The details still need to be worked out, but, I suspect that some combination of tax policy and government spending will be used. Other less formal methods of persuasion may be used as well. For example, how much longer will President Obama continue to meet the CEO’s of large corporations who are sending jobs overseas and laying off Americans here at home. I’ll wager that Democrats in both Houses will be raising the same point themselves soon.

The continuing global recession will impact the life sciences sector as well as the rest of the economy. Unfortunately, for life sciences, it’s going to get involved in government policy and funding just like the auto and financial services sectors. (Please see my earlier blogs comparing life sciences to Big Auto.) The old line firms, Big Pharma, have only been deluding themselves for some years now. Cost cutting has maintained profit levels but once patents expire with no new blockbusters to replace them and generics begin to erode market share then some of those companies will start to go away.

Here’s where we may see Big Pharma starting to find ways to hire more people here in the States. Either that or they may begin to break up. Given that CEO’s and their staff are the last ones to realize that the game is over, we’ll probably start to see other desperate measures. Remember that overseas cash that I mentioned earlier? We may see Big Pharma lobbyists trying to get some tax breaks in Washington promising jobs creation or return from abroad in exchange. Of course, the question is what would these people do? Hiring back office people doesn’t add to the bottom line although it may improve employee morale among the existing overworked staff. Hiring sales rep’s only works when there’s something to sell. Hiring R&D types to produce something to sell is not a bad idea, but, given how long it takes to develop new drugs and then do trials, there won’t be any immediate relief here.

In closing, maybe Big Pharma may add jobs to curry favor with a new administration desperate to put people to work, I just don’t think they’ll last.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Saturday, January 17, 2009

After Satyam, Is Wipro Next?

What’s going on in India? Specifically, with its outsourcing businesses. First, there was Satyam and their little bookkeeping problem. (What’s a billion dollars more or less among friends?) Now, Wipro is announcing ( ) that it had been banned by the World Bank from bidding on business for four years because of inappropriate dealings with its employees. Since we are focused on the pharmaceutical and biotechnology businesses and its service suppliers, a question that immediately comes to mind is what is the impact of such seemingly unethical practices by key suppliers to the "ethical" pharmaceutical industry. Does this have the kind of collateral damage that makes the industry question this aspect of their "globalization" and/or "outsourcing/out-tasking" strategies. More to come on this as the situation unfolds.

In the meanwhile, a few questions about the WIPRO situation. First, why is the announcement made now? Compared to Satyam’s problems, this is the proverbial parking ticket. A cynic might say this was a great smoke screen for what otherwise might have been a serious ethical violation. Second, do these ethical violations indicate more substantial problems in the Indian outsourcing sector? Third, could these ethical lapses impact growth possibilities especially in the United States with its holier than thou attitude in these matters? Finally, could legislation like the Foreign Corrupt Practices Act (FCPA) or Sarbanes-Oxley preclude Wipro from actually bidding for work?

Back to the first question, why make the announcement now? OK, take advantage of the confusion, but could there be more? Either more transgressions or more firms? I don’t know, I’m just asking.

Second the question of fraud and questionable payments. While Bernie Madoff has proven that the Western world doesn’t have a lock on ethical behavior, India’s problems could be the tip of the iceberg. What other controls could be compromised? Information privacy is important to companies that outsource and offshore, especially the health care/pharmaceutical industry. How can anyone be sure that their information and their secrets are safe? Might there be HIPAA violation if such privacy concerns surface?

Third, growth for the outsourcers could be affected in several ways. One way is by potential customers staying away from the affected companies. Another could be new competitors arising, playing on the Indian companies’ weaknesses. Maybe Singapore is more expensive but has a much higher ethical rating. (Remember an American teenager getting caned for vandalism? Think what they’d do to Bernie.)

And, last but not least, what’s the potential for fines and liability in the United States? Or, look at it another way. How many government agencies and other quasi-government bodies might ban these companies from bidding on work? Could we see policy decisions preventing work from going offshore? Let’s not forget that the US government is slowly acquiring the US financial services industry while I’m writing this blog. The new administration might have an opinion about these Indian companies doing work there. Should such events occur, what is the spillover effect to the Pharmaceutical and allied businesses?

So, let’s summarize. I believe that the Indian outsourcing industry after a good run that began with the Y2K work of the Nineties is going to go through a period of consolidation. Unfortunately, combined with the recent tragic events in Mumbai, foreign companies may begin to have second thoughts about doing business there. The stronger Indian players could acquire the business of the faltering firms and be stronger than before. Proactive responses to the problems in the industry could provide opportunity. However, more spending may be required to put the controls and processes in place that large, multinational companies are expecting. There are still good reasons to outsource to India, but, India will have to work harder to keep what it has and gain new business.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Saturday, January 10, 2009

Satyam: Are the Outsourcers Melting Down Next?

Lately, I’ve been a little frustrated that I couldn’t blog about the Bernie Madoff scandal. (Actually, I could have but Larry said I’d just have to find another blog to do it at. He’s a stickler for staying focused.) Of course, I can look at poor Mike Huckman over at CNBC standing outside Federal court houses in the cold and rain during the Holidays waiting for a glimpse of the accused and console myself with being inside warm and safe. But, now, I may have a fraud of my very own to blog about. Granted, Satyam is a not a life sciences company but it does service them and there may be implications here.
Let’s start with the fundamentals of outsourcing. Essentially, commodity functions that are considered to be non-core activities are transferred to an outside vendor. The idea is that a vendor can take advantage of economies of scale and through continual process improvements to become best in class or the next best thing and make its money by spending far less to perform these services than is coming in. The problem is that classic economic theory teaches us that unusually high profits bring in more competition driving down prices and profits. And, this is where the fun starts. (And, this is where the hedge funds got into trouble.) It becomes increasingly difficult to post those double digit profit gains year over year when there’s more competition. Also, there’s one other aspect that most commentators miss. The early outsourcers got the easy deals, simple processes, large volumes, and low capital investment required. Those salad days are long gone now. So, a firm which is trying to support its stock price either to maintain executive compensation or values for future acquisitions starts to look at questionable practices for what they justify will be a short time. But, once down that slippery slope as probably happened to Bernie Madoff, there’s no going back. It takes a lot to avoid this temptation. Unfortunately, for Satyam, B Ramalinga Raju couldn’t resist temptation. Apparently, Raju overstated Satyam’s to 20 per cent from 3 per cent. I’ll hazard that the latter is more the norm for outsourcers than not these days.
One writer has described this financial scandal cum crisis as “India’s Enron”. What will happen to all those customers who have outsourced those back offices to Satyam? Now, I don’t know if any significant percentage of Satyam’s business came from life sciences, but, I think this could put a chill on future outsourcing deals. Looking at their website ( ) they appear to offer a fairly broad array of services in the life sciences sector. Coming so soon after the Mumbai terror attacks back in November this won’t be good for the Indian outsourcers. I also suspect that life sciences companies who had been planning to outsource their operations and reduce their costs while they were at it will now be having some second thoughts.
As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Friday, January 9, 2009

Contrarianism Lives!

There seems to have been a lot of writing recently about the lack of merger activity and what may be possible. Amgen seems to be getting a bit of ink too, but, then that one always seems to. First, Julie MacIntosh of the Financial Times published an interesting piece ( ) concerning this subject on their website this January 6th. Her take was that the mergers and acquisitions market would be slow in coming back as companies assess risks and investment advisors want to appear cautious in recommending deals. Earlier in the week, Andrew Jack, also of the Financial Times speculated ( ) about Pfizer entering into a large acquisition of a rival and what it might lead to in a pharmaceutical industry shying away from the large deals that spawned many of today’s Big Pharma companies. His musings were based on comments by Jeff Kindler, Pfizer’s CEO. He noted debates in the investment community about Pfizer acquiring Amgen. (CNBC had also reported this story.) As I wrote earlier, that’s an old story heard many times before.
What I find interesting here is how from very substance, a lot of speculation is going on. As I blogged earlier, I don’t think there is much of a market for large deals in the pharmaceutical industry right now. I find myself more in agreement with Julie MacIntosh about deal prospects in the industry. That is, the length and breadth of this recession will determine people’s willingness to return to the deal markets. Like I wrote earlier, she quotes Mark Shafir, the global mergers and acquisitions head at Citibank, who believes that bankrupt or near bankrupt companies will provide the first wave of opportunities. He goes further saying that cash rich companies may then begin to prowl for values. But, all this will take time. While these activities may start this year, I don’t think that they will culminate in any significant deal activity until 2010 at the earliest.
I know that some people have been writing about 2009 being the big year for drug company acquisitions. I’m just not buying into it. Let’s see what comes of these vaunted pipelines. Let’s see what happens when a President Obama instructs Medicare to negotiate drug prices with the drug companies. (I’ve always found it interesting that when corporations squeeze their vendors for lower costs, it’s capitalism; when the government does it, it’s Marxism.) As this blog has repeatedly said over the last year, there is too much capacity in the drug industry. Whatever deals happen this year will be restructurings designed to handle this fundamental problem.
As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin

Monday, January 5, 2009

Being Contrarian

Well, it’s the New Year and I’m looking around at the debris left over from last year. Over the Holidays, I took some time off, wrote my last blog for the year, and caught up on my reading. One of the pieces that I read was Mike Huckman’s nine predictions for 2009 in the pharmaceutical industry ( ). Mike was at his usual, insightful best but I did differ with him on one key point. (Not only that, I was disagreeing with Barbara Ryan over at Deutsche Bank as well. I’m really going out on a limb here.)

Where I differed from Mike was his prediction that 2009 would see large Pharma acquisitions and mergers after none in 2008. I disagree here for several reasons:

First, the fundamentals are wrong. There is too much capacity in the global drug industry presently and little compelling reason to combining large companies (I'm at a loss to find a compelling example from the last Pharma industry mega-mergers). Despite low market valuations, what would any of the Big Pharma gain by merging? Pipeline? I don’t think so-where's the productivity advantage? Sales forces? Layoffs have hit these heavily at many drug companies, so there isn't much advantage to be found here. Current products? Aren’t many of these coming off patent, which two companies would have really complimentary pipelines? As we've seen with Big Auto, where many predicted mergers among the Big Three for many years, similar reasons prevented these from occurring. They just didn’t make economic sense! When somebody like an American Motors went under, then, yes, vultures moved in and bought the pieces at fire sale prices. So, this my first reason why I don’ think we will see any Big Pharma deals this year.

Next, the fallout from last year’s Wall Street debacle hasn’t been fully factored into the mergers and acquisitions business that could fuel a pharmaceutical merger. Goldman, Sachs and Morgan Stanley are no longer investment banks. Merrill Lynch is now just a fond memory for those of us who used to work on the Street. My point is that many of the facilitators of the large, and I mean really large, deals are either no longer around or are preoccupied with their own survival. Yes, I know there are other players there, but, I don’t think we’re going to see any of yesterday’s feeding frenzies anytime soon.

Finally, I believe that Big Pharma has to get itself organized to face the new realities of the global economy. As drug patents continue to run out cash will be drawn down to meet operating expenses. Assets will have to be sold off. These may be the non-pharmaceutical businesses owned by some or what valuable drug related ones that may still be marketable. As I blogged last year, Big Pharma could very well be where Big Auto was several years ago. And, this is where I think the opportunity is for Big Pharma in 2009. Breaking up and selling off of the large, pharmaceutical companies could be the real driver. Overcapacity and shrinking pipelines aggravated by developing cash flow pressures could be the catalyst for this activity. Let’s see what happens.

As always, we welcome your feedback. Please contact us at We look forward to hearing from you.

Contributed by Guy de Lastin