Now That's How to Grow a Company!

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Dear Pfizer (NYSE: PFE  ) and Merck (NYSE: MRK  ) ,

You really should take note of how Abbott Labs (NYSE: ABT  ) is growing. As I see it, the path to health-care supremacy isn't through your large acquisitions of Wyeth and Schering-Plough (NYSE: SGP  ) , but through lots of small acquisitions.

Sure, Abbott's acquisition of privately held Visiogen for $400 million yesterday didn't get the same fanfare as your acquisitions that topped $40 billion, but if you do enough of those deals, it seems likely that you'll get more bang for your buck.

Visiogen's replacement lenses for cataract patients have been on the market in Europe since January and are currently under review by the Food and Drug Administration, so there's plenty of room for growth. The acquisition is a nice addition to Abbott's growing eye-care franchise after its acquisition of Advanced Medical Optics earlier this year, and diversifying should help it compete against eye-care powerhouses Allergan (NYSE: AGN  ) and Alcon (NYSE: ACL  ) .

Johnson & Johnson (NYSE: JNJ  ) is another example of a company that's grown into a gigantic force through relatively small acquisitions. For instance, it bought Centocor for $4.9 billion, well before Centocor's anti-inflammatory drug, Remicade, became a blockbuster. In case you lost track, Remicade alone brought in $3.7 billion in sales last year. Pfizer, you're not going to find that kind of growth left in Wyeth's competing product, Enbrel.

Yes, Wyeth and Schering have drugs in their pipelines that could come to fruition, but you're also paying for a lot of stale drugs that will lose patent protection in the not-too-distant future. Purchases of 100 Visiogen-sized companies might have been a better move for long-term growth, even if it won't have the same short-term effect on the revenue line.

Respectfully suggested,
Brian Orelli
Motley Fool Contributor

Pfizer is a Motley Fool Inside Value recommendation. Johnson & Johnson is an Income Investor pick. Alcon is a Global Gains recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 977675, ~/Articles/ArticleHandler.aspx, 10/22/2016 4:14:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 18 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
ABT $40.50 Down -0.24 -0.59%
Abbott Laboratorie… CAPS Rating: *****
ACL.DL2 $167.99 Down +0.00 +0.00%
Alcon CAPS Rating: ****
AGN.DL $0.00 Down +0.00 +0.00%
Allergan CAPS Rating: ****
JNJ $113.44 Down -1.43 -1.24%
Johnson and Johnso… CAPS Rating: ****
MRK $61.20 Down -0.72 -1.16%
Merck and Co. CAPS Rating: ****
PFE $32.18 Down -0.36 -1.11%
Pfizer CAPS Rating: ****
SGP.DL2 $28.15 Down +0.00 +0.00%
Schering-Plough Co… CAPS Rating: ****