Pfizer to buy Wyeth
Well, the deal came through and finally moved at lightning speed. Wyeth has agreed to be acquired by Pfizer, making the #1 drug company even large in scope. The cost was an amazing $68 billion in cash and stock, a very rich deal for this credit-starved time. The proportion of cash to stock will reportedly be two to one. The deal is the largest in the pharmaceutical market in almost ten years. (In 2000, Glaxo Wellcome bought SmithKline Beecham for $76 billion in 2000.)
The new company will have 17 products that bring in over a billion in sales. The general opinion is that Pfizer, with the clock ticking on its flagship cholesterol drug Lipitor, which accounts for some 25% of its revenue and is the world's biggest-selling prescription drug. Pfizer especially wanted to grab some Wyeth drugs about to hit the market, in order to keep its pipeline full, something its own R & D efforts have failed to do. Wyeth in that regard is a little better off than Pfizer, but it faces the same problems a few more years out.
Wyeth also has an over-the-counter division that sells such medications as Advil (pain-reliever, Dristan (colds and flu), Alavert (allergies), Robitussin (coughs), Preparation H (hemorrhoids) and Centrum (vitamins). In 2006, Pfizer sold its own consumer drug operation to Johnson & Johnson. The question is whether it will sell off the Wyeth products. Wyeth also has a position in the infant nutrition field, something Pfizer is likely to get rid of.
This big deal will be the first test for the Obama antitrust team. It will be interesting to see how it is handles. As usual, rumors are rife that competitors like Glaxo, Johnson & Johnson, and Bristol Myers Squibb may be forced to start acquiring again.
And while it may buy Pfizer some time (along with massive layoffs), it still doesn't really solve its R & D problem and the continued eating away of its profits by aggressive generic drug companies. Bigger, in drug companies, is not always better.
10:42:48 PM 
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