5 Reasons Pfizer Shouldn't Buy Wyeth

 |  Includes: PFE, WYE
by: Eben Tessari

Reasons to buy Wyeth (WYE)

  1. Misery loves company.

Reasons not to buy Wyeth

  1. Doesn’t come close to solving Pfizer’s (NYSE:PFE) near term need for late-stage pipeline drugs
  2. Major mergers in pharma almost always destroy shareholder value (Pisano, 2007).
  3. Fails to address lack of internal R&D productivity (i.e., not a “disease modifying” business move but rather, a superficial band-aid).
  4. Opportunity cost is too high; Pfizer could buy 10 innovative companies for the cost of 1 Wyeth (e.g., Shire, BioMarin, OSI, Allergan, Forest…) or, move into generics.
  5. Wyeth’s marketed / late-stage pipeline has issues: Protonix and Effexor lose patent protection by 2011, bifeprunox and Pristiq have been plagued by issues / slow uptake and will probably never reach the combined $4B in projected sales.

I would be astonished if this deal materialized.