Matt Herper, at Forbes has a very well-thought-out story this morning (do go read it all, here), on the similarities he now sees between some parts of Abbott's $6.6 billion deal for Solvay, and the problems besetting various cardiac medicines -- especially those without verified clinical outcomes benefits -- like Vytorin®, thus:
. . . .Catherine Arnold, the pharmaceuticals analyst at Credit Suisse, says it is more about financial engineering, using cheap cash to buy out a firm Abbott now pays royalties to for a lucrative heart franchise. That will boost earnings per share by 10 cents, or 3%, in 2010 and eventually by as much as 9%, or 30 cents per share.
But the increased bet on the franchise of heart drugs is risky. Generic versions of the $1.3 billion drug TriCor are expected as soon as next year. A newer drug, TriLipix, isn't expected to make up for the loss. And some doctors are starting to have doubts about the usefulness of some drugs, which have failed to prove their benefits in large clinical trials. . . .
The worry is that sales could drop even faster, just as sales of Merck and Schering-Plough's Vytorin have dropped after a few studies led doctors to realize the paucity of evidence for that drug.
[Still, it's] hard to criticize Abbott's decision to purchase the Solvay drug unit. The deal will add to earnings almost instantly, and the price was actually cheap. . . .
Also, on Merck/Abbott interfaces and connections, see my story of yesterday -- indicating it was a near-winner for the Merial assets earlier this summer -- and suggesting it might surface, once again with even more cash in hand, to bid on various parts of Intervet, after the bust-up/reverse merger is closed. Also this morning, Merck annouced it would distribute CSL's regular seasonal vaccine lines in the US for the next six years, at least -- so far, this doesn't include commercial scale batches of H1N1 vaccine. The two already had a deal along these lines -- they've simply extended the would-be termination date.
Finally, last week the ECC had indicated that the earliest possible clearance date for the Merck-Schering deal would be October 23, 2009 (but most papers are only now reporting it). However, the clearly more-important US FTC/DoJ antitrust division hasn't made any such forward looking announcement, on the deal's prospects. Nor will it.