Monday, March 14, 2011

Schering-Plough/Merck's Intervet Animal Health Picture -- Suddenly, It's All "Up For Grabs"!

Before the market opened this morning, Lilly had announced that it was acquiring Johnson & Johnson's Animal Health businesses, for an undisclosed price.

By mid-morning, Pfizer had told Tim Anderson at Sanford Bernstein that it was considering spinning off, or divesting at least parts of its vast Animal Health businesses (including the legacy Fort Dodge businesses).

Add to this that we know Sanofi's and Merck's Merial JV is proposing the sale of perhaps one-third of those two companies' animal health assets.

What emerges -- in all this frenetic activity -- is that the traditional lead-names in Animal Health are likely no longer to be the lead names (say goodbye to Pfizer/Fort Dodge and J&J; say hello to Lilly & Co., and whomever turns out to be Merial's purchasers).

Here is a bit of how Matt Herper, writing at Forbes, describes the Pfizer game-changer -- but, do go read it all:

. . . .[Quoting Tim Anderson:] “We recently met with Pfizer’s new CEO Ian Read, and had we not heard it firsthand, we might not have appreciated just how serious he is about potentially splitting up the company,” Anderson writes. He goes on to say that Pfizer may shrink its revenue base by 40%, leaving behind only what Read calls the “innovative core. . . .”

According to Anderson, this could mean splitting out not only all of Pfizer’s non-pharma divisions [which plainly includes Pfizer/Fort Dodge Animal Health]. . . .

It looks to be a bumpy ride, from here, for the New Merial JV -- as almost all the pieces are in play out on the global game board.


Anonymous said...

According to the following article FDA's Antiviral Drugs Advisory Committee will review Merck's boceprevir on April 27 and Vertex's telaprevir on April 28.

However I can't find any information on any such meetings on FDA's website. Which makes me wonder if true how did Dow Jones get this information. Even if the conpnies know this Merck shouldn't have access to Vertex's info and vica versa. Also we need to consider when the two drugs were submitted to the agency and if such closely scheduled AC meetings make sense.


Anonymous said...

Do you think that Merck would potentially bust up non core businesses like Pfizer commentary out today? Seems that Animal Health is essentially spun off and they could easily get rid of consumer business. They would probably be able to sell women's health too.

condor said...

First -- thanks to Salmon's excellent research skills -- we have a new post, overhead. Thanks, buddy!

Next, as to Comment No. 2 -- yes, one of my theses has long been that the Schering-Plough deal would in fact mutate into a bust up.

And that is exactly what is happening. [In fact, it might fairly be said that Pfizer is imitating Merck here, today, not the other way around!]

In any event, as you point out, Animal Health is mostly gone, or going (via the Sanofi-led Merial reconstituted JV); CEO Frazier has said he is looking to shop or partner the Consumer Health businesses, and I'd not be shocked to see Womens' Health offered to a EU based pharma concern, by 2013.

Both the leaner Pfizer, and the leaner Merck, would then be focused on the very high margin drug products that aren't off-patent in the 2012-2014 timeframe.

We shall, as ever, see.

Namaste -- and thanks for the great input from you both!