Elan: If You Can’t Beat Them, Be Them

Freud (Anna, not her father) coined the psychoanalytic term ‘identification with the aggressor’ to describe a process wherein an individual identifies with–and emulates–the behavior of someone they experience as a threat, in order to feel less vulnerable. Elan has now displayed that defense mechanism on the grand corporate scale, paying $1 billion to Theravance in exchange for 21% of that Company’s respiratory drug royalty stream from GSK. This takes place in the context of Elan fending off Royalty Pharma‘s attempt to acquire Elan–for its Tysabri royalty stream. The conjecture on the Street is that it is a message to Elan shareholders, reassuring them that Elan will not waste its resources on risk-laden extreme sports, like developing CNS drugs. Elan’s CEO Kelly Martin told Reuters that “This (Theravance deal) was not done because of Royalty whatsoever….Royalty – to myself, to the board, to pretty much every shareholder that we can talk to, frankly – is utterly irrelevant.” Right–the company that Elan had considered acquiring last year, and is now seeking to instead acquire Elan in a hostile takeover, is “utterly irrelevant.” Were Kelly Martin on Anna Freud’s couch, this would be interpreted as a blatant display of denial.

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