This Baby Is a Nice Addition

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The marriage between Merck (NYSE: MRK) and Schering-Plough is already starting to produce offspring. The only question is whether the fertility treatment for its pipeline was worth it.

Today, the drugmaker received a positive opinion from the EU's Committee for Medicinal Products for Human Use (CHMP) for its fertility treatment Elonva. The drug works just as well at helping women get pregnant as its currently available treatment, Follistim, and requires fewer injections. The way the EU system works, a positive opinion from CHMP is essentially an approval, although Merck will need to wait for the European Commission to sign off before it can start marketing the drug.

Elonva probably isn't going to be a blockbuster, but the decrease in the number of needle sticks may help persuade more women to look for some added help at getting pregnant. Besides, if a drug company can string together enough drugs with sales of a couple hundred million each, their combined revenue is as good as a blockbuster anyway.

One of the driving forces for Merck's acquisition of Schering-Plough was its substantial pipeline compared to Merck's barren one. This is the first in a series of new drugs that Merck can expect to work their way through the pipeline.

While a nice addition to the family, Elonva isn't really a validation of the large acquisitions that Merck and Pfizer (NYSE: PFE) made. Schering got its hands on the drug -- and many others -- through its smaller purchase of Dutch Akzo Nobel's Organon BioSciences subsidiary. Smaller purchases often provide more bang for their buck.

Are you listening AstraZeneca (NYSE: AZN) and Eli Lilly (NYSE: LLY)? Just say no to large acquisitions. Grow your family the old-fashioned way: a couple of drugs at a time.