Beyond novel science

If we're lucky, Merck & Co.'s move last week to acquire Medco Containment Services Inc. for $6 billion will put an end to biotech road shows where CEOs proclaim their intention to build a "fully integrated pharmaceutical company."

Nobody knows that a fully integrated pharma company is going to be, and the whole idea dangerously distracts from the new thinking required to create companies that can acquire financing and provide a return for investors. The critical point is that the remapping of health care is unstoppable. President Clinton's health care plan will provide a focus (or lightening rod) for these changes, but Pandora's box was loosened before he and Hillary Rodham made the scene.

In Merck's case, it's not surprising that big pharma should move downsteam to seek control of its distribution channels. Facing the near-certainty of health care budgeting in some form, and diminished earnings prospects, control of the marketing channels may be a more compelling route to sustainable earnings growth than the P&L-withering pursuit of drug development.


Conventional wisdom now presumes that distribution will be in the hands of