Pfizer unveils $68 billion takeover of Wyeth
pharmafile | January 26, 2009 | News story | Sales and Marketing | MA, Pfizer
Pfizer has unveiled a deal to acquire Wyeth for $68 billion, creating a new giant in pharmaceuticals, biotech, vaccines, consumer and animal health.
The move has become essential because Pfizer, the biggest pharma company in the world, faces a rapid fall in revenues when its blockbuster Lipitor goes off patent in 2011.
Lipitor's $13.5bn revenues in 2007 accounted for nearly a third of its total income, and about 40% of its profit.
Pfizer says the Wyeth acquisition will help it move away from dependence on one product, and says no drug will account for more than 10% of the combined company's revenue in 2012.
The company's chief executive Jeffrey Kindler hailed the acquisition as a great deal for shareholders of both companies.
He said: "The combination of Pfizer and Wyeth provides a powerful opportunity to transform our industry. It will produce the world's premier biopharmaceutical company whose distinct blend of diversification, flexibility, and scale positions it for success in a dynamic global health care environment.
"The new company will be an industry leader in human, animal and consumer health. With our combined biopharmaceuticals business, it will lead in primary and specialty care as well as in small and large molecules. Its geographic presence in most of the world's developed and developing countries will be unrivalled."
Wyeth has been facing its own patent expiry problems, including ulcer treatment Protonix, which expired last year, and antidepressant Efexor, which loses US exclusivity in 2010.
The company had been in talks to acquire vaccines specialist Crucell, but this deal has now been cancelled.
Wyeth's chief executive Bernard Poussot said: "Wyeth and Pfizer are highly complementary businesses, and together we can build the best diversified health care company in the world. We believe we can better execute our strategy and can accomplish far more together in the years ahead than either company could have achieved on its own."
Kindler put special emphasis on Pfizer's plan to continue its pursuit of the 'lean organisation' style, saying it would combine the spirit of "small, agile enterprises" within its large-scale operations.
The companies say the merger will yield cost savings of around $4bn, which will be fully realised by the third year of operations. They say savings are expected in sales, informational and administrative functions, as well as in R&D and manufacturing.
The elimination of duplication in sales forces, R&D teams and elsewhere are certain to lead to thousands of redundancies in the US and Europe, where both companies have already been cutting back in recent years.
The $68bn acquisition will be financed through a combination of cash, debt and stock. A consortium of banks has provided commitments for a total of $22.5bn in debt.
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