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Home » Business » Manufacturing
Pfizer deal talk proves a tonic for Wyeth
By Nicolas Johnson |
January 24, 2009, Saturday
|
Print Edition
Print Edition
WYETH gained as much as 15 percent in German trading after the Wall Street Journal reported that Pfizer Inc is in talks to acquire the United States drug maker for as much as US$60 billion.
Negotiations have been going on for several months and the process may yet collapse because of volatile financial markets, the newspaper reported. Wyeth shares rose the equivalent of US$6.13 to US$44.96 in Germany after closing at US$38.83 in New York on Thursday, while Pfizer fell 47 cents from yesterday's close of US$17.21 in New York, Bloomberg News reported.
A combination would create a drug maker with sales of more than US$70 billion and have best-selling medicines including the cholesterol pill Lipitor and the Prevnar vaccine against pneumonia. Pfizer Chief Executive Officer Jeffrey Kindler, 52, has already announced a reorganization to accelerate drug development and plans to fire staff as the recession threatens to crimp sales. "It makes a lot of sense in some ways," said Savvas Neophytou, an analyst at Panmure Gordon & Co in London. "The acquisition of Wyeth really brings into focus the vaccine space."
The recession has drug makers struggling to shield earnings as consumers scale back or stop some treatments. The economic crisis may cost drug makers as much as US$10 billion in revenue this year as sales of prescription drugs in the US are expected to increase at their slowest rate on record, IMS Health Inc, a market researcher, said in October.
The world's largest pharmaceutical companies face patent expiries on top-selling products in coming years, forcing them to seek ways to spur expansion. Pfizer lacks enough new products to replace the more than US$12 billion in revenue it will begin losing in three years when Lipitor, the best-selling medicine in history, loses patent protection.
Pfizer's US$26 billion in cash and marketable securities as of September 2008 could help finance a takeover. A bid at US$60 billion would be the biggest since a group led by Royal Bank of Scotland Group Plc acquired ABN Amro Holding NV last year for about 72 billion euros (US$95 billion).
Negotiations have been going on for several months and the process may yet collapse because of volatile financial markets, the newspaper reported. Wyeth shares rose the equivalent of US$6.13 to US$44.96 in Germany after closing at US$38.83 in New York on Thursday, while Pfizer fell 47 cents from yesterday's close of US$17.21 in New York, Bloomberg News reported.
A combination would create a drug maker with sales of more than US$70 billion and have best-selling medicines including the cholesterol pill Lipitor and the Prevnar vaccine against pneumonia. Pfizer Chief Executive Officer Jeffrey Kindler, 52, has already announced a reorganization to accelerate drug development and plans to fire staff as the recession threatens to crimp sales. "It makes a lot of sense in some ways," said Savvas Neophytou, an analyst at Panmure Gordon & Co in London. "The acquisition of Wyeth really brings into focus the vaccine space."
The recession has drug makers struggling to shield earnings as consumers scale back or stop some treatments. The economic crisis may cost drug makers as much as US$10 billion in revenue this year as sales of prescription drugs in the US are expected to increase at their slowest rate on record, IMS Health Inc, a market researcher, said in October.
The world's largest pharmaceutical companies face patent expiries on top-selling products in coming years, forcing them to seek ways to spur expansion. Pfizer lacks enough new products to replace the more than US$12 billion in revenue it will begin losing in three years when Lipitor, the best-selling medicine in history, loses patent protection.
Pfizer's US$26 billion in cash and marketable securities as of September 2008 could help finance a takeover. A bid at US$60 billion would be the biggest since a group led by Royal Bank of Scotland Group Plc acquired ABN Amro Holding NV last year for about 72 billion euros (US$95 billion).
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