Af­ter a slate of small, tack-on ac­qui­si­tions, is Mer­ck ready to pull the trig­ger on a big M&A deal?

Ken Fra­zier on­stage at a deal­mak­ers event in New York City,No­vem­ber 2018 The New York Times

Like any good big phar­ma CEO, Mer­ck’s Ken Fra­zier likes to paint a big, pos­i­tive pic­ture when he talks with an­a­lysts about R&D. But in his lat­est quar­ter­ly sit-down with the Wall Street crowd, Cowen’s Steve Scala of­fered an un­usu­al push­back on Fra­zier’s as­ser­tion that Mer­ck — a sto­ried out­fit with a long list of block­busters to its cred­it — has one of the broad­est pipelines it’s seen in more than 20 years.

“What are we miss­ing ex­ter­nal­ly that Mer­ck sees in­ter­nal­ly?” asked Scala.

Fra­zier came back with their 3 top can­cer pro­grams for Keytru­da, Lyn­parza (part­nered with As­traZeneca) and Lenvi­ma. He went on to cite “a for­mi­da­ble in­ter­nal pipeline of as­sets in on­col­o­gy over 20 unique mech­a­nisms” and high­light­ed vac­cines and an an­tibi­ot­ic ex­ten­sion pro­gram.

The ex­change un­der­scores some grow­ing ten­sion on Wall Street that Mer­ck has too many eggs in one very large — and in­creas­ing­ly com­pet­i­tive — bas­ket. Af­ter build­ing up its on­col­o­gy arm around its star $7 bil­lion-and-grow­ing on­col­o­gy fran­chise for Keytru­da — re­cent­ly aug­ment­ed by their big deal with As­traZeneca on Lyn­parza — the mighty Mer­ck doesn’t have a whole lot of late-stage R&D work to boast about. And it def­i­nite­ly has the num­bers to go big­gish if it wants to, par­tic­u­lar­ly as Glax­o­SmithK­line, Eli Lil­ly, Bris­tol-My­ers and Roche and oth­ers in the big phar­ma class start pick­ing up as­sets in block­buster ac­qui­si­tion pack­ages.

Here’s the multi­bil­lion-dol­lar ques­tion:

Should Mer­ck be think­ing big about a ma­jor M&A deal around the late-stage pipeline? Maybe some­thing in the $10 bil­lion bolt-on range? Maybe one that isn’t ul­ti­mate­ly all about Keytru­da and im­muno-on­col­o­gy?

On March 7, just a few days from now, R&D chief Roger Perl­mut­ter will cel­e­brate the 6th an­niver­sary of his ap­point­ment. So we de­cid­ed to take a look at all the buy­outs and col­lab­o­ra­tions the com­pa­ny has done dur­ing his tenure, and be­fore, to get a close look at what the BD team there has been do­ing. Chris Doko­ma­ji­lar at Deal­For­ma has pulled every M&A deal, com­mer­cial and R&D pact over the past decade, and it of­fers a clear road map on where the mon­ey has been go­ing.

You can see it all in pre­cise de­tail in the charts be­low.

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