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Why the Investment Banking Industry Will Be Happy"The Wall Street Journal" reported that pharmaceutical giant Pfizer, Inc. (NYSE/PFE) has been talking to Wyeth (NYSE/WYE) about a potential acquisition. Wyeth is much smaller than Pfizer, but its current stock market capitalization is well over $50.0 billion. The pharmaceutical industry is ripe for consolidation for two reasons: the availability of capital is scarce right now; and most of the big players in the industry face a lot of patent expirations over the next three years. Really, it's the patent expiration glut that will be the driver of consolidation in the pharmaceutical industry. Credit is tight and the stock market is down, so raising money to expand in the current environment is more difficult. So, the answer is to merge with your rivals and consolidate your operations so you can better weather the economy and the patent expiration storm. If you're a large-cap pharmaceutical company and you can't grow your revenues, you might as well merge to get bigger and shed jobs to grow your earnings. It's a time-tested strategy that mostly works in all industries. This trend will certainly help Wall Street, which, as an industry, is really in need of some new business. With capital markets around the world in turmoil, there are not as many fees coming into what's left of the investment banking industry. The shine has been taken off of Wall Street's shoes of late and, with the hedge fund industry also in turmoil, there isn't enough trading revenue to go around. M&A will be Wall Street's savior over the next couple of years and this is good news for an industry that's been beaten up. It will also be good news for the consulting industry and, of course, it will be good news for the lawyers. The only bad news about industry consolidation in pharmaceuticals is that we'll lose some solid dividend-paying companies and there will be less competition in the marketplace. Wall Street won't be the only beneficiary of new M&A activity. No doubt the antitrust folks in government will be getting busier. Profit Confidential --- http://www.profitconfidential.com/ LOMBARDI PUBLISHING CORPORATION News, Analysis, and Information Services Since 1986. One Million Customers in 141 Countries. Lombardi Publishing Corporation Financial Publications Division 350 Fifth Avenue, Suite 3304 New York, NY 10118-3304 --- Copyright 2008; Lombardi Publishing Corporation. All rights reserved. No part of this e-newsletter may be used or reproduced in any manner or means, including print, electronic, mechanical, or by any information storage and retrieval system whatsoever , without written permission from the copyright holder. Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHORMitchell Clark, B. Comm., Senior Editor at Lombardi Financial, specializes in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for eleven years, is currently authoring a book on how to pick small-cap stocks for maximum profits. Prior to joining Lombardi, Mitchell was a stock broker for a division of one of the largest financial institutions in North America.
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