Merck Highlights Need to Beef Up, Diversify

The model for business growth seems straightforward: You get a promising idea, research its potential, invest in the right marketing, then sit back and watch your product or service sell.

But if there's one thing we're all learning, it's that there's no sure route to success. A television- and newspaper-based advertising structure can crumble. SUVs that sold spectacularly well for a decade can suddenly sit, ignored, on dealer lots. Businesses that don't adapt to changes in consumer taste or new scientific breakthroughs get left on the sidelines, watching their profits shrivel.

That's the lesson behind this week's big merger news. Pharmaceutical giant Merck(MRK Quote) made an offer to buy rival Schering-Plough(SGP Quote) for $41 billion, the kind of mega-deal that's gotten all-too-rare these days. For both companies, it's a chance to strengthen their core competencies, while diversifying into a wider range of products. ...