Tactical, Operational & Strategic Analysis of Markets, Competitors & Industries
It's a done deal. Pfizer will be taking over its smaller rival Wyeth in a deal valued at $68 billion, the Wall Street Journal, Financial Times, and New York Times all report this morning. It is the largest acquisition in the pharma sector since Glaxo Wellcome acquired SmithKline Beecham for $76 billion in 2000, the WSJ writes. Meanwhile, the NYT puts the megadeal into today's perspective, saying it "would not only create a pharmaceutical behemoth but would be a rarity in the current financial tumult: a big acquisition that is not a desperate merger of two banks orchestrated by the government." On Sunday night, Pfizer's board agreed to the Wyeth deal, the NYT reports, citing people in the know. The acquisition calls for the drugmaker to raise $22.5 billion in loans, no small feat in this frozen credit market. According to the FT, Wyeth's strong lineup of vaccines and its biotech businesses were the draws for Pfizer. "And the two companies could save billions of dollars in costs by combining," the newspaper adds.
So why keep merging? I haven't got the data handy but for a while the thought was that a bigger sales force would lead to more robust sales. If my old (unchecked!) assumptions are still accurate, I believe that relative sales force efficacy was dropping off, since doctors and hospitals were chafing at the thousands of reps spreading an ever-increasing web of chinese food lunches and open bars throughout health centers.