Dow Jones interviewed me yesterday about Merck & Co's (MRK) proposed acquisition of Schering-Plough (SCP). See Drug Middlemen May Feel Pharma Consolidation Pressure.Two quotes:
- "In general, the consolidation of manufacturers is bad for wholesalers because it's giving the drug makers much more leverage in their fee-for-service negotiations.
- "This deal is not a game changer for the wholesalers, but it's one more pressure point on their business."
- "The recently announced Pfizer-Wyeth deal, meanwhile, might have more of a direct effect on the wholesalers because Pfizer is just now adopting fee-for-service contracts with the distributors, and its terms could differ from those of Wyeth, Pembroke Consulting's Fein said. The larger a manufacturer, the more sales volume it controls, and therefore the more power it wields in negotiations, Fein said."
AmerisourceBergen (ABC) and Cardinal Health (CAH) both highlighted their "great relationships" (their words) with manufacturers. McKesson Corporation (MCK) had no comment on their relationships with manufacturers.
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Great editorial in the Wall Street Journal this morning on the pharma industry: Mergers & Inquisitions
"Deal-making is fast reshaping the pharmaceutical industry, and we wish we could say it was a sign of creative destruction. More likely it is the industry's way of anticipating, and building insurance against, the coming era of government-run health care."
I agree.
