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Pfizer completes Wyeth merger

Published on 15/10/09 at 08:14am

Pfizer expects to complete its $68 billion acquisition of Wyeth today after receiving sign-off on the deal from regulators in the US and Canada.

The clearances from the US Federal Trade Commission and Canadian Competition Bureau were the last Pfizer was waiting for and require the company to divest some animal health assets and amend its Canadian distribution agreement for menopause treatment Estring.

As part of these measures the company will sell half of Wyeth's animal health business, and its own horse vaccines business, to Boehringer Ingelheim.

"We are pleased to have received all of the requisite regulatory approvals for our combination with Wyeth," said Pfizer chairman and chief executive Jeffrey Kindler.

"We now look forward to combining the two companies so that we can achieve meaningful results for patients, customers and the communities we serve, as well as for our shareholders."

Pfizer was already the world's biggest pharma company and the acquisition of Wyeth significantly boosts its scale to create a new giant in pharmaceuticals, biotech, vaccines, consumer and animal health.

Cutting Lipitor dependence

The move became essential because of the rapid fall in revenues Pfizer faces 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 said earlier this year the Wyeth acquisition will help it move away from dependence on one product, and that no drug would account for more than 10% of the combined company's revenue in 2012.

The companies hope the merger will yield cost savings of around $4bn, which will be fully realised by the third year of operations. Savings are expected in sales, informational and administrative functions, as well as in R&D and manufacturing.

But 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.

Moreover, research from Datamonitor suggest that while the merger will help stem the decline in Pfizer's prescription pharma sales, it won't stop it completely.

The figures from earlier this year say sales were declining at a compound annual growth rate of 3.5% to 2013, due to patent expiries such as that of its blockbuster statin Lipitor.

Pfizer-Wyeth is forecast by 2013 to have combined prescription pharma revenues of approximately $55bn, slipping back from the $61bn earned last year.


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