Oh, Financial Times, you naughty little tease. You got us all in a dither by talking about how Pfizer (PFE) - Get Report is in hot pursuit of another huge drug company, jumping to conclusions and assumptions along the way. And, of course, a passel of business media followed your lead.
Here's how the ugly situation started: The
ran an article on Sunday called "
With a headline like that, you'd figure there'd be something specific behind it, such as a particular company Pfizer was eyeing and presumably in advanced talks with. But no such luck. The headline was built on a foundation of nothing more than this little quote from Jeff Kindler, Pfizer's chief executive: "The real goal is to grow revenues. ... We are open to opportunities and constantly looking at those which are big, small and in between."
So Pfizer is apparently open to the concept of an acquisition -- but what is this "large rival" the headline refers to?
Predictably, other business media outlets soon weighed in, not to temper the
misplaced enthusiasm but to echo the overreaction in the same language.
Look at this
Pfizer Mulls Big Rival Acquisition: Report
." And the lead: "Pharmaceutical heavyweight Pfizer is mulling buying a large drug company to improve its financial health, bucking the trend among its peers, which have turned against the `mega-mergers' of the past, the Financial Times reported on its Web site."
did not limit its expectations-raising damage to Pfizer. Even without a specific Pfizer merger in the works, the
reported that "any large-scale acquisition by Pfizer could drive a fresh round of consolidation in the sector, as other companies await the U.S. group's move before responding with deals of their own."
Uh, come again?
Look, The Business Press Maven acknowledges that at some point in the future, Pfizer might make an acquisition. It has important drugs such as Lipitor coming off patent, so the company could use a deal. And it has cash, so it can conceivably make one. But if competitors are truly considering a wave of acquisitions, why in the world would they be sitting on the sidelines waiting for Pfizer to act? Would, say,
let Pfizer drive prices up? Get the best catch first?
Moreover, it's not as if the history of large-scale acquisitions in the drug industry has been successful. Quite the opposite.
is just one example of a merger that did not live up to its much-hyped expectations. Even assuming available cash and credit, why would other companies want to go where many have failed before?
Isn't it time to question the robotic assumption always laid down by the business media that one acquisition -- even one that appears, at best, nothing more than a theoretical possibility -- will set off an entire wave?
Then again, old robotic assumptions die hard. Look at this, only the third sentence of that
article that followed hot on the heels of the
, echoing its every misplaced bit of excitement:
"Such a move could trigger a fresh round of mergers within the sector, as pharmaceuticals, unlike other sectors, still have cash reserves to fund big deals and Pfizer's rivals are looking at the company before making a move towards consolidation, the paper wrote."
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;
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