Merck ($MRK) CEO Kenneth Frazier affirmed two commitments at the J.P. Morgan Healthcare Conference. One, he's still sold on the company's status as a diversified pharma company, with vet drugs and consumer health as part of the mix. Two, he's still not in the market for a big deal.
"I don't see us looking for another large combination," Frazier said (as quoted by Bloomberg). "The conclusion we've reached at Merck is that the sweet spots are really in the early stage."
With the latter comment, Frazier sits right smack in the middle of his peers. Not one drugmaker executive expresses a desire to mega-merge these days. Analysts are saying $10 billion-plus deals will return--Frazier admits that a Merck buyout of the $10 billion-or-so Bausch + Lomb is worth thinking about--but huge deals are at this point strictly out of fashion.
On the diversification side, Frazier is joined by GlaxoSmithKline ($GSK), Sanofi ($SNY) and Novartis ($NVS), all of which have expanded their offerings in related businesses, including animal health, consumer health and eye care. Pfizer ($PFE), on the other hand, has been shedding business units, including animal health and nutrition. And AbbVie ($ABBV), the former pharma division of Abbott Laboratories ($ABT), started the new year as an independent company, thanks to a spinoff.
The question is whether Merck will build up in consumer health. As Bloomberg reports, Frazier recently said the business is still small compared with the rest of the company. "The consumer business is a business that frankly is not quite at the scale of the animal health business. ... [I]t's something that we have to consistently look at and evaluate as to how it can be a meaningful contributor." A Bausch + Lomb deal would be a quick way to ensure that.
- read the Bloomberg piece