Merging Merck and Schering-Plough

It’s no surprise that drug-makers Merck and Schering-Plough have decided to merge, said Lionel Laurent in Forbes. The pharmaceutical industry is undergoing a “major facelift” in 2009—the $41-billion Merck-Schering Plough deal comes a little more than a month after Pfizer’s announcement that it was buying rival Wyeth for $68 billion. This is just the kind of consolidation you’d expect as the patents on the companies’ blockbuster drugs expire, threatening profits.

Merck’s Monday announcement of its offer for Schering Plough is still welcome news, said Andrew Willis in the Toronto Globe and Mail. “At a time when many CEOs and boards are fretting about the future, and unwilling to commit cash to takeovers, the big pharmaceutical companies are rationalizing operations and preparing for a better tomorrow.” That should give other businesses a confidence boost.

Maybe, but this is not a sign of strength, said Douglas A. McIntyre in 24/7 Wall Street. No matter how much Merck and Schering-Plough talk about the “synergy” this deal uncorks, it’s all about saving $3.5 billion a year “in a rough economy and in a world where Big Pharma companies are losing many of their profitable drugs as their patents expire.”

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