Pfizer: What It Will Look Like a Year from Now

| About: Pfizer Inc. (PFE)

The Wall Street Journal's Health Blog got a chance to ask the higher-ups at Pfizer (NYSE:PFE) what their R&D will look like a year from now. Their (understandably) not too-in-depth answers are here: Decentralized research units, with some functions run company-wide, and this quote: "There are elements of drug discovery and development where you just need scale".

Well played! I wouldn't expect anything less. But are there elements of drug discovery and development where scale - massive, ponderous, hundreds-of-vice-presidents scale - actually hurts? I don't think you're going to hear that topic brought up very much at Pfizer, at least not out in the open. And let's not lump those two functions together: drug development benefits from a company's size a lot more than drug discovery does. Once you've gotten to a critical-mass level, sheer size (as far as I can see) does nothing to help productivity in drug discovery, and actually seems to damage it. As evidence for that statement, let me point to Pfizer's internal research record, as opposed to the stuff they've gone out and bought.

And what might be refreshing is an admission that big mergers - drag-on-for-months am-I-going-to-still-be-here mergers - come with an acute productivity penalty no matter what. I may have missed it, but I don't recall hearing anyone from Pfizer say anything like "Although we know that this is going to be a huge disruption, we think that in the end it'll be worth it". No, it always seems to be the Day One, hit-the-ground-running, now-the-synergy-starts stuff, which is just not in sync with reality.

Well, we can come back in a year and see what Pfizer's R&D operation really looks like. But I'll venture a guess: huge. Unwieldy. Not as productive as you'd think it should be. Still rearranging and getting smaller as the company tries to figure out how to make it all work. And looking over its shoulder for the next big acquisition. Anyone want to bet against any of those?