Can Derivatives Cure Drug Stocks?

The Celebrex trapdoor that has opened beneath Pfizer (PFE Quote), coming less than three months after Vioxx administered a similar clobbering to Merck (MRK Quote), highlights an industry with structural troubles.

It would be too easy to cast stones at Big Pharma, to call these companies greedy or avaricious or simply careless in their testing and development. We could argue all day and into the night whether the industry spends too much on advertising or is too focused on patent extension and the development of me-too drugs.

So let's not. Instead, let's engage in a few thought experiments about the nature and structure of this industry and those similarly situated. ...