Wyeth: Trouble's Teachings

Executive Summary

Recent news that long-term hormone-replacement therapy was doing more harm than good slashed Wyeth's valuation by 25%-$15 billion-overnight, even though the company maintains there was "nothing shocking" in the study. Hormones had been its top-selling product franchise. It's another hard knock for a company that only just settled a nationwide class-action suit, to the tune of $13.2 billion, over anti-obesity drugs fen-phen and Redux. Wyeth has also had well-publicized troubles with manufacturing. But Wyeth is stronger than it was just a few years ago, partly because acquisitions boosted research productivity but also because it learned from hardship. The company is quicker to face up to problems and deal with them. It's also more aware of the ramifications of developing biological drugs, especially in terms of production. Wyeth should be able to continue growing without resorting to M&A, if it can learn to be as active in prosperity as it has learned to be through adversity.