Thursday, April 7, 2016

Pfilergan's "Inpfersion" Pfail: What Most Financial Wags Are Too Timid To Say...

Quite rightly, in our view, the talk surrounding the demise of the Pfilergan mega-redomicile deal has turned to a broad review (courtesy of Merck's CEO Ken Frazier) of the US corporate tax rates, and the policies under them -- which are plainly in need of additional -- and wholesale -- editing.

However, this morning, I write to note that -- because of the size of the interests involved, and the need for MSM journalists to still get favorable quotes and interview opportunities, almost no MSM outlet is saying what is obvious (at least to me). [To be clear, I too would be careful about criticizing the 800 pound gorilla's new pink fur-fringed mu-mu, if my paycheck in part required friendly access to the same gorilla.]

But the breath-taking speed with which both Pfizer and Allergan CEOs pivoted -- to extoll their "stand-alone" virtues, is an admission of its own -- by silence (and omission).

Consider that FiercePharma yesterday afternoon (quite correctly, but belatedly, in my view) pointed out that there was, in fact, little "synergy" value in the Pfilergan deal, all along -- and turned that into a virtue, post the Treasury rule tightening. Here's a bit, but all this backhanded praise is in fact proof that the whole deal was always mostly financial engineering -- at the tax line -- not even aimed at operating income leverage. Do go read it all:

. . . .The [scuttled] deal's tax advantages made Pfizer's long-term numbers look good--but not great. It would have given Pfizer a slate of new drugs in new therapeutic areas, but not much opportunity for cost-cutting in the integration, which is a typical motivation for big mergers. It came with some solid pipeline meds and development deals, but no guarantee that Pfizer could avoid the R&D disruption that has plagued previous megamergers--including those in Pfizer's own deal history.

Frankly, megamergers have shown time and again to interfere with the very innovation pharma companies say is first on their minds. . . .

In some senses it is hilarious; in others it is unfortunate -- that Mr. Read's (i.e., financial accountant's) view is what passes for "vision" -- at the largest public pharmaco in the world. It should thus be Mr. Obama and the Treasury Secretary Mr. Lew who receive praise -- for this deal not done -- as Mr. Read was plainly hell-bent on doing it (as we've repeatedly shown). He was saved. . . from himself.

Onward -- with a healthy, hearty, hale and whole outlook on life, this fine cool Spring morning!

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