In a Reuters-London interview tonight, Merck CEO Dick Clark candidly admits that most of the rest of pharma has not followed his (and Pfizer's CEO Kindler's) lead -- and why:
. . . .Rival drugmakers are likely to wait and see how this year's mega-mergers turn out before considering another round of big-ticket acquisitions, according to Merck & Co's chief executive.
Richard Clark, whose company agreed to buy Schering Plough. . . said the industry was looking for proof that deals could provide more than just cost savings.
"I would suspect some companies may sit on the side line just to see how well these activities are taking place," Clark told Reuters during a visit to London to unveil a vaccine joint venture with the Wellcome Trust medical charity. . . .
Credit Suisse analyst Catherine Arnold said in a report on Thursday that the next wave of deals by major pharmaceutical companies would emphasise revenue augmentation over cost savings.
She also predicted a divergence of activity between U.S. and European drugmakers, given new European chief executives' stated disinterest in large deals. . . .
Clark (surprisingly-candidly) likens these cost-slashings-only (headcount-reduction) mergers to "kicking the can" down the alley: when you later catch up to the can, you have to kick it again, just to stay-even, at the EPS line. His suggestion is that Merck is trying to redesign the way it does research -- so that can-kicking (or, mass-layoffs) will become rarer, in the future.
Color me rather-skeptical about that particular notion.