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On March 9th,
Merck and Schering-Plough announced their merger, to the tune of $41-BILLION dollars.
NYTimes has a neat graphics to outline the M&A of the pharma industry, esp Pfizer + Wyeth and Roche + Genetech. These companies are becoming huge, trying to stampede competition and buy out innovations.
Right now we are busy bailing out banks that are "too big to fail", the same banks that went on a M&A spree and used the big money bag to lobby politicians into changing the regulatory system. So, why are these drug companies, who already have too much influence in Washington, able to consolidate even further? If consumers with good credit cannot get small loans, how can these huge companies get so much loans?
Aren't they becoming yet another "too big to fail" industry?
Comments (4)
So it would seem. And yet General Motors is NOT too big to fail. What do you suppose is the difference?
@Eccentrique - I'm thinking GM doesn't get much love because they lost their top status to the financial, healthcare, and tech sectors. Also people still believe that American car companies suck. I hated the big three for selling so many of the gas guzzlers, but I suppose they were making the thing people wanted. Japan's big 3 also were in the gas guzzler thing, but they kept investing in small cars because of their domestic market.
I'm thinking we should let GM fail and invest so much more onto energy sector, because that's where the next revolution is!
I'm thinking there is much truth in your speculations, Grace. But I'm guessing that the fact that GM has unions, and the other industries do not, also makes a difference. We in America don't like unions any more, even though they were primarily responsible for creating a strong middle class back in the 1950s and 1960s.
I'm thinking that, rather than let GM fail, we should help GM retool so that it can start making electric and hybrid vehicles, etc. You're absolutely right that the energy sector is where the next revolution is. And GM already has a huge infrastructure in place. They just need the right incentives to get them moving in a more energy-friendly direction.
Didn't you get the memo? That's the new "American Way" of business. Become so big you are the industry. Then, like GM, you get the "we can't let them go under, we'd have no car makers!" What happened to small competitive firms allocating resources efficiently?! We certainly can't let it be done more efficiently oversees. Comparative advantage is only meaningful if we're the ones at the advantage! Maybe we're going to realize that we're not a very productive country anymore because we don't actually produce stuff anymore. We're a service economy. We trade money, information and give each other coffee. Of course I'm generalizing a lot, but there's some truth behind it. We've let America slip into a bad corner. The last thing we need is more big anything, let alone pharma! (Next to that I'd complain about large agribusiness).