Pfieth Buys Wyzer!

January 27th, 2009 | Sources: Wall Street Journal

Subjects:

These days when a deal gets done—and the $68 billion Pfizer-Wyeth tie-up won’t close until Q3 the earliest—it’s so weird people get tongue-tied in their haste to spread the news.

Just 2 weeks ago Pfizer trip-wired news tickers by announcing it would riff 800 researchers, but people knew there had to be more coming if it wanted to retain its title as the biggest fish in the Big Pharma Sea.

Every calendar at Pfizer HQ has 2011—the year Lipitor loses patent protection—circled in red. Lipitor, the best selling drug in the world, accounts for 25% of the company’s $48 billion annual revenue.

Pfizer plans to borrow $22.5 billion from 5 banks to finance its big swallow. It’ll pony up stock and cash to cover the rest. The offer for Wyeth translates to $50 per share, a 29% premium.

Pfizer CEO Jeff Kindler’s legacy will be tied to the Wyeth deal. Since arriving there 2 years ago, he’s fired 15,000 employees, closed labs and sold off production facilities to improve efficiency.

The Wyeth deal affords more such opportunities, but Kindler needs to show more than axe-wielding skills to erase memories of the Exubera fiasco in which the insulin spray was shelved after Pfizer dropped nearly $3 billion on its R & D.

Not to mention that Pfizer had to scrap a heralded Lipitor successor when it was discovered during clinical trials to kill people.

Wyeth’s appeal lies in its pneumoccal vaccine Prevnar, which cleared $2.5 billion in 2008, its anti-inflammatory drug Enbrel and its consumer health business which includes Chapstick, Robitussin and Advil.

Not that all these combined match what Lipitor did for Pfizer, but Kindler had to start somewhere.


 

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