Over the weekend, the Wall Street Journal (citing the sorts of sources that will leak to the Wall Street Journal) reported that the rumored Pfizer-Allergan merger is indeed going through. Brett Saunder’s guest post on Forbes was enough to make me think that, actually, but “people familiar with the matter” said that both companies’ boards voted on the proposal on Sunday. The report has Ian Read as CEO of the new company, with Saunders as chief operating officer, but most of the coverage of this deal is going to be about the complex, multifaceted, transnational tax situation that Pfizer is trying to work its way out of – an accountant’s merger.
This is not a happy event. But by now, by this point, it’s not a sign of disaster, either. We all know Allergan’s attitudes towards research, but those (I think) can only scale so far. I don’t think that a company the size of the combined Pfizer/Allergan can just decide that y’know, everyone else can go do that R&D stuff, we’ll just sit back and buy them out once the winners become apparent. It’s too expensive. I honestly think that Valeant was coming to the end of the line for that strategy, with all the debt that they’ve taken on, and that’s why we’ve seen all the revelations about dubious sales and accounting over there: they had to do that stuff in order to have a chance of making things work. On the Pfizer scale, I just don’t see it working at all.
So no, I don’t think that the newly merged companies are going to purge the R&D labs. They need them, still, and it’s not like Allergan’s bringing much with them. But that doesn’t mean that things are necessarily going to be great over there, either. But when was the last time that things were? I mean, if you’ve been working as a scientist at Pfizer over the last twenty or twenty-five years (and I wonder how many such people are around), when were the periods when you thought “Yeah, things are actually going pretty well around here”? Pfizer’s longtime merger-merger-merger strategy has sown so much fear and uncertainty over the years that some folks are bound to experience some schadenfreude at seeing the company’s own people experiencing the same worries, but they’ve been feeling those all the way along It’s not like Pfizer never let any of its own people go during all these upheavals. Sure, they hammered the acquired companies even more, but everyone got to experience the fun. This is just going to be more of the same.
And “more of the same” pretty well sums up my feelings about the whole deal.The Journal says that “the combined company is expected to evaluate splitting into two businesses, one focused on patent-protected products and the other on drugs that have lost their patent protection or are close to losing it.” But Pfizer was supposedly thinking about that several years ago. Ian Read now seems to be claiming that he was misquoted and misinterpreted when (back after he took over the CEO job) he seemed to be talking about changing the company’s strategy. But no, here we are in 2015, and another great big Pfizer deal is in the works. Wait a few years, and there will probably be another.