Pfizer/Pharmacia merger will create pharma giant
Pfizer, already the world's biggest drug company, has agreed to buy US/Swedish group Pharmacia for US$60bn (€60bn), giving it full rights to a range of drugs including the blockbuster arthritis drug Celebrex (celecoxib). The deal will create an industry giant with revenue in excess of $48bn (€48bn) and an r&d budget of more than $7bn (€7bn). The deal comes as drug companies are facing slowing or declining revenues and are watching their stocks sink to their lowest level in years, amid unprecedented pressure resulting from a dry spell in research labs, rising competition from generics makers and intense pressure on prices from governments and private buyers around the world.
In addition to the blockbuster Celebrex, the transaction will produce a company with a dominant range of drugs. Pfizer is also acquiring Bextra, the follow-on drug to Celebrex. Both are already jointly marketed with Pharmacia, but buying the company will give Pfizer full control over the Celebrex-Bextra arthritis franchise. The two drugs are expected to have combined sales of $3.75bn (€3.75bn) this year.
In the past three years, Pfizer has struggled to find replacements for some of its ageing blockbusters. It has launched only two new medicines on the US market that were discovered by company researchers - a schizophrenia treatment called Geodon, with sales of $150m(€150m) in 2001, and Vfend, an antifungal drug approved in May. Its last major launch was Viagra four years ago.
In Pharmacia, Pfizer is acquiring a relatively strong drug company, with four drugs that have $1bn-plus sales or potential sales. Moreover, Pharmacia's major drugs don't face any patent threats for years. Its cancer drug Camptosar is the closest to patent expiration - in 2007. Pfizer's current top-selling products include the cholesterol-lowering drug Lipitor, Norvasc (hypertension), Zoloft (depression), Viracept (HIV/AIDS), and Zirtek (allergy).
The merger is not expected to give rise to any regulatory approval problems as the two companies have few overlapping products and Pfizer's global share of total pharma sales - currently 8% - will rise to only around 11%. The only potential stumbling block could be in the area of urinary incontinence, where Detrol, Pharmacia's blockbuster-in-the-making was poised to face competition from Pfizer's Darifenacin, which it expects to submit for FDA approval this year.