Pharmas continue to diversify into lower margin businesses because CEOs and boards are betting on different requirements from a new system of health care delivery. They also figure their jobs will be safer. The choices: Is the likeliest avenue to growth through successful R&D, or through positioning appropriate for future health care delivery and payment systems? Bristol-Myers and Amgen have chosen the former - both because each is too small to diversify and because each believes it has a reasonable track record in innovation. Novartis and most other large pharmas want to take both roads at once--and are either dramatically expanding to enable product bundling or to give themselves enough time to prepare for what the health care system demands. Either way, the wild card of health care reform is making business strategy something of a crap shoot for companies both large and small.

Emerging global markets are a hot topic in pharmaceutical circles these days, but until recently, most Westerners viewed them as a homogenous cluster. Few executives at corporate headquarters drew distinctions among the various countries, let alone the domestic and international players in those markets. As big pharma bumps up against growth constraints in its traditional markets, however, interest in the "rest of the world" is perking up. The largest pharmaceutical companies are all looking at the same promising half dozen or so emerging countries, but they are taking radically different approaches to tackling them and are moving at different paces.

Pfizer and GSK inked an innovative deal to create a jointly owned company focused on HIV therapeutics. The marriage combines GSK's marketing muscle and a stable of established products with Pfizer's newer offerings. While it's unlikely the new venture will unseat rival Gilead as the top player in the HIV market, the deal could be a cash cow for both drug makers, especially if a spin-out ensues.