"All About the Drugs"

Merger Monday is back. At least for Big Pharma. Merck announced on Monday that it would buy rival Schering-Plough for $41.1 billion in cash and stock, in a deal the New York Times neatly sums up as being "all about the drugs." Such mega-mergers were to be expected after Pfizer stumped up $68 billion to buy Wyeth in January. "But if Pfizer-Wyeth was driven in part by desperation, analysts said, for Merck the Schering deal may actually be a good opportunity to restock its medicine chest," the newspaper writes. Merck, with several patents expiring, would get access to successful Schering products like the prescription allergy spray Nasonex and to biotechnology drugs in development.

The Wall Street Journal focuses on the rapidly consolidating sector. After the Merck and Pfizer deals, there is also Roche Holding's unsolicited bid for biotechnology pioneer Genentech in the works. The roll-ups show Big Pharma is changing strategy away from developing new lines of blockbuster drugs as it did in the 1990s to now bringing in new lines of business, the newspaper writes. BusinessWeek concurs, though in a more critical tone. These mega-mergers may look good for the bottom line, but they are "killers for research," the magazine concludes.

Is Uncle Sam preparing to bailout Citigroup yet again? The WSJ breaks news this morning that federal banking regulators are indeed keeping a watchful eye on the troubled bank, drawing up fresh contingency plans "to stabilize the bank if its problems mount." The contingency plans, sketchy as they are, emerged as regulators conduct stress tests on the nation's most vulnerable banks. What could those problems be? With the share price hovering around a buck, there are concerns panicky clients could pull their business from the bank, a situation that, bank officials are quick to point out to the newspaper, is not materializing.

Brace yourself, taxpayer. You may be asked for money yet again to prop up the tottering banks. Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., told the Washington Post yesterday that a government plan to strip toxic assets from the banks' books will be painful at first, but "the painful purge would help restore confidence in the banking system." And, now the kicker: "The effort might require more money than the $700 billion Congress has approved to aid the financial industry, but she added that taxpayers would probably reap an eventual profit on the asset purchases," the newspaper writes. Where have we heard this before?

And just like that, Ford has struck a harmonious accord with its union, the United Auto Workers. Ford's salaried workers ratified on Monday sweeping cuts that cover overtime and unemployment pay, cutbacks in work rules and cost-of-living wage increases, and changes to pension pay. The agreement puts further pressure on Chrysler and General Motors, which need similar concessions from their unions to dramatically cut costs, the WSJ reports. And with just three weeks left to convince the Obama administration that a fresh bailout would be a wise investment, ailing automakers GM and Chrysler on Monday invited the "auto task force" in to kick the tires, the Detroit Free Press writes. The task force was given true red carpet treatment: They test-drove the Chevy Volt, visited a Chrysler truck plant, and had a sit-down with UAW's Ron Gettelfinger, the newspaper says.

We move overseas now, where there is a fresh deflation fear coming from Beijing. According to the WSJ, consumer prices in China fell last month for the first time in six years, a worrying signal that the country's economic recovery is stalling. China's National Bureau of Statistics insists it is too early to be using the D-word, and some economists agree. Still, Reuters points out, China's "Commerce Minister Chen Deming and Industry Minister Li Yizhong, speaking at a joint news conference, both used the word 'grim' to describe the immediate outlook for Chinese exports and the manufacturing sector." Meanwhile, European Central Bankers struck a more hopeful tone yesterday. According to the WSJ, European Central Bank President Jean-Claude Trichet, citing a modest rebound in corporate-bond markets, told reporters on Monday, "We're approaching a moment where we might have a pickup." Trichet also took a moment to lecture investors who, he believes, are not putting enough faith into moves by governments to restore financial institutions and restore the credit markets.

And, finally, Google's YouTube is in a fresh copyright dispute in which it says it is being forced to pull music videos from the popular video-sharing site. The latest legal scrap is occurring in the United Kingdom, where the Financial Times reports Google abruptly blocked the music videos after it failed to agree on a new royalties deal with collections body PRS for Music. But this time there's a twist. The collections body is complaining the loudest that the videos are no longer accessible on YouTube, saying they are "shocked and disappointed" at Google's actions.