Maven: Pfizer's Future

Not until the third line from the bottom does that article throw a sentence at the fact that those drug deals come at a huge premium. And it doesn't question the competency of management to at least overpay for a workable drug. This is a management, I don't need to remind you, that shouted to the skies how good business was two days after laying off 20% of the sales force and one day before the prized prospect was dumped. Their track record is spotty, at best.

And Barron's, like many other post mortems, brings up the quickly emerging conventional wisdom that companies with rival cholesterol drugs, such as Schering-Plough(SGP Quote), Abbott Labs(ABT Quote) and Kos Pharmaceuticals(KOSP Quote) might be a good way to go.

Could be, but the business media are ignoring a possible larger truth here in how the modern reality of drug companies has perverted the normal business relationship between size and risk. Typically, smaller companies are riskier. But drug companies, which rely on a small number of products, compared with, say, a retailer of similar size, have gotten so big over time that for any new drug to have a meaningful impact, it needs to be huge. This has led to bigger gambles, as we saw with torcetrapib, and thus much more risk for investors.

Barron's sums up with one of the most thinly backed claims I've seen: "So for investors with the patience to wait perhaps two years, the stock may manage to pump out some surprising returns."