Pfizer Loads Its Shopping Cart

Pharma titan Pfizer's purchase of King Pharmaceuticals,which was announced October 12,will augment its existing product lines in Primary Care,Established Products and Animal Health.The 3.6 billion dollar cash transaction brings new formulations of pain treatments that discourage misuse and abuse;the EpiPen auto-injection device;and a number of animal feed additives,into Pfizer's diversified businesses.
Pfizer CEO Jeff Kindler said they are highly impressed by King's innovative products and technology in the pain relief area.U.S. physicians wrote about 320 million prescriptions for painkillers in 2009.
Pfizer will also acquire King's promising new compounds in various stages of development.Pfizer already markets its own Celebrex and Lyrica painkilllers,and King will add Avinza,the Flector Patch and Embeda to the painkiller portfolio.
The deal is expected to close in late 2010 or early 2011,pending regulatory approval.
At the end of 2011,Pfizer's blockbuster drug Lipitor will go off-patent,resulting in a big loss of revenue.Pfizer is shopping for new income streams to help offset the loss of most of the billions Lipitor earns annually.In September,Pfizer announced its purchase of FoldRx Pharmaceuticals,a biotech firm specializing in neurodegenerative diseases.Last year,Pfizer bought Wyeth Pharmaceuticals for 68 billion dollars.
Pfizer(PFE)

Pfizer's R&D Empire

Drug colossus Pfizer has a sprawling research and development segment.Within its two R&D divisions,PharmaTherapeutics and BioTherapeutics,the company is investigating treatments for a host of ailments.The research units in each of the divisions include Allergy and Respiratory;Antibacterials;Biocorrection;Cardiovascular Metabolic&Endocrine Diseases;Genitourinary;Inflammation and Immunology;Neuroscience;Oncology;Pain;Tissue Repair;and Vaccine Research.PharmaTherapeutics is concerned with small molecule therapies,while BioTherapeutics handles large molecule therapies.
Pfizer recently closed on its acquisition of rival Wyeth and is busy integrating the two firms' research and development activities.This will result in the shuttering of six facilities and some 2,000 layoffs.Facilities to be closed are located in New York,North Carolina,New Jersey and the U.K.The company is headquartered in New York City,under CEO Jeff Kindler.

The Particulars

Wyeth shareholders will receive 33 dollars plus 0.985 of a Pfizer share per Wyeth share.This is a 29% premium over the Wyeth share price before the talks began.We've spent the last two years getting into a position to do something like this,Mr.Kindler repeated.As a result of this transaction,over time we're gonna have tremendous financial strength and flexibility,and will continue to look for opportunities,the Pfizer executive stated.Wyeth owns drugs such as Enbrel,Effexor and Prednar.A consortium of five banks is underwriting the deal,which is to be half-cash,half-financed.Pfizer will cut its dividend in half to accomodate the deal.It is the biggest pharma deal in about 10 years,and the third biggest of all time.

A Position of Strength

Pfizer is in excellent financial shape,CEO Jeff Kindler maintains.We've achieved significant cost savings-even beyond our goals,Mr.Kindler said.Our dividend is part of a long term strategy that will increase growth.Pfizer and Wyeth have very similar cultures;they should be a good fit,Jeff Kindler observed.Bernard Poussat,Wyeth Chairman and CEO,added that it's possible the deal will start a wave of pharmaceutical consolidation.This deal makes sense,Mr.Poussat agreed.

Focus on Pharma:Inside the Pfizer-Wyeth Deal

Pfizer,the largest U.S. drugmaker,is acquiring rival Wyeth.Pfizer CEO Jeff Kindler says they've spent the last few years really strengthening Pfizer,and now they're in the position to do a really transformative transaction.It is to be financed through a combination of cash,debt and stock.This deal meaningfully addresses challenges like the patent expiration of Pfizer's blockbuster cholesterol drug Lipitor.The deal is for 68 billion dollars in cash and stock.Mr.Kindler believes Wyeth is a great fit for Pfizer.