The Tale Of Two Pharma Giants -- Two Differing Market Reactions

Well, Merck did beat on 2012 results (vs. consensus estimates) at both the top- and bottom-lines.

However, with the odanacatib delay -- and the splash caused by Pfizer's partial Animal Health IPO/spin at an above range price (IPO at $28 -- now showing a $2 one day pop; after being expected to price at $26), it is emminently safe to say that Pfizer is stealing all of Merck's show. Second- (or actually, third-) fiddle, is Merck by revenue, now.

This is powerful evidence that, in a longer strategic lens, Pfizer is willing to rethink its businesses -- today, splitting/spinning its animal health unit; being willing to consider separating the mature from the high-margin drugs, etc., etc. -- all while dealing with the loss of revenue on what was the world's best selling drug.

Merck may well need to think about doing some of these same things (though the jury is certainly still out on the Abbott Labs/Abbvie version of these transactional/structuring ideas).

For the record, I do not agree with some of the analysts who now say Merck must consider additional massive headcount-reducing internal restructurings -- at least, not at the moment. The businesses are fundamentally very healthy -- just not the wildly-high margin newly-branded pharma drug ones we once saw (mid-2000's). . . so, stay the course, Whitehouse Station.

But be open to additional structural/transactional ideas -- big or small.

Here's a bit of the earnings release:

. . . .2012 Full-Year Non-GAAP EPS of $3.82, Excluding Certain Items; GAAP EPS of $2.16; Fourth-Quarter Non-GAAP EPS of $0.83, Excluding Certain Items; GAAP EPS of $0.46. . .

2012 Full-Year Worldwide Sales Were $47.3 Billion, a Decrease of 2 Percent, Including a 3 Percent Unfavorable Impact from Foreign Exchange; Fourth-Quarter Worldwide Sales Were $11.7 Billion, a Decline of 5 Percent, Including a 2 Percent Unfavorable Impact from Foreign Exchange. . .

2013 Full-Year Non-GAAP EPS Target of $3.60 to $3.70, Excluding Certain Items; GAAP EPS Range of $2.03 to $2.26 . . .

Do saty tuned -- we may have developments on the Scheinberg Fosamax bellwether trial, in Manhattan, yet this evening.