Pfizer and Wyeth’s $68bn Deal




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Video title: Pfizer and Wyeth’s $68bn Deal
Released on: January 27, 2009. © PharmaVentures Ltd
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Is the Pfizer and Wyeth deal a good move? Does this provide opportunities for other big pharma in 2009? Tibor Papp and Kevin Bottomley of PharmaVentures answer these questions and more in this special edition of the PharmaVentures Business Review.
Is the Pfizer Inc and Wyeth deal a good move?
Fintan Walton:
Hello and welcome to PharmaVentures business review. In this special addition we are looking at the Pfizer and Wyeth merger [PharmaDeals ID = 32282] which is taking place today on the 26th of January. On this show I have Tibor Papp who heads up Transactions and Advisory at PharmaVentures and with him I have Kevin Bottomley who is Senior Principal within the Transactions Group. Welcome to the show both of you.
Fintan Walton:
So Tibor is this a good deal or a bad deal for Pfizer and Wyeth?
Tibor Papp:
It is certainly a bad deal in the long run but a very good deal in the short term. Certainly it's a bad deal in the long run because we know that Pfizer is facing very significant patent expiry coming up in 2011 in the Phase of Lipitor looking at a patent Cliff and Wyeth is looking at a patent expiry of EFFEXOR in 2012 again about $4 billion exposed. So we both of these companies will face very significant patent expiries and there is additional products in their marketing portfolio that will come off the Cliff. So looking at the pipeline products and the marketed products these companies the combined entity will not grow in 2012 or 2014 in fact they will decline. In the short run however you know combine two companies of similar predisposition they can command very high cost savings in terms of cutting cost in R&D, in the marketing efforts and so on. Pfizer is proposing that they can save about $4 billion very quickly. So within a year they can " they can generate by higher profit margins and that could be a very positive for their share price. However and that is we look into the future and there we see that Wyeth itself has only very few assets in the pipeline that may command higher revenues. So over all the combined entity will face a grim future going forward.
Complimentarity of the two portfolios
Fintan Walton:
So a question for you Kevinis when these two entities merge together they wanna have to go through a portfolio review how complimentary are these two portfolios?
Kevin Bottomley:
There is a very little overlap between their expected portfolios of each company and in some ways the Wyeth acquisition gives Pfizer a lot of what they've been looking for and over the last few years they've had a desire to move into vaccines and they have some very good early vaccines assets but clearly in acquiring Wyeth they acquire a company with a long with a large strong vaccine portfolio and in fact the world's largest selling vaccines. They also acquire a portfolio in CNS compounds and other biologicals. Enbrel is one of the leading biological drugs on the market at the moment. And this is clearly an area which Pfizer has aspired to be in biologics and this gives them instance access to that. So in a lot of ways I think the portfolio matches very, very good very little redundancy and I think great opportunity to sales force synergies to really sort of drive out good value from this merger of these two portfolios.
Expectation of the deal
Fintan Walton:
So a question for you Tibor. Were we expected this to happen?
Tibor Papp:
Back in 2007 there were rumors in the industry that Pfizer and Wyeth were in talks. So in many ways it is not a surprise and we know " we knew that Pfizer had been in discussions with a number of pharma companies including large pharma and biotech's. However the actual occurrence of this deal is still a surprise because what we can see is the merger of two traditional business models although Wyeth is more focused on the biologicals than Pfizer and we still can see in the long run how it can work out for these companies.
The process of integration, the issues and the opportunities for other pharmaceutical companies
Fintan Walton:
So a question for you Kevinis when these two entities merge together they obviously go through an integration process, what can we expect and what dangers should they look out for?
Kevin Bottomley:
So both companies are American, both companies have been formed from the integration of companies in the past so in lot of ways they are ideally set out for a merger and going forward. The issue is in current times that the merge company will have in our view very, very pure pipeline and the challenge for the integrated company will be to focus on not only integration but at the same time being able to effectively in license and acquire opportunities from outside which will help to boast really what is a pure merged pipeline.
Fintan Walton:
So Tibordoes this provide an opportunity for other pharmaceutical companies?
Tibor Papp:
Certainly does provides opportunities. With this merger Pfizer the largest player is out of the game, acquisition game for a while at least and this leaves a number of very good biotech assets out there in the industry. As Kevin Bottomley indicated Pfizer will be heavily involved in merging the core companies and not acquiring large biotech companies with very good pipelines as well as portfolios in the market but we also know there is a large number of midsized biotech companies who strongly use these pipelines. The good example is that they dropped Crucell, Wyeth, [PharmaDeals ID = 29800] dropped Crucell from it's acquisition targets as a result of this Pfizer merger.
Fintan Walton:
Okay gentleman, thank you very much indeed for coming on the show and giving us some insight into the latest deal between Pfizer and Wyeth. Thank you very much indeed.
Kevin Bottomley
Senior Principal within the Transactions Group PharmaVentures
Tibor Papp MD, PhD, MBA (Head of Advisory & Transactions) Tiboris strategy advisor with 16 years of experience in the healthcare / life sciences industry in the areas of corporate strategy, venture capital investment, portfolio development, business transformation, licensing / M&A, market entry strategy, and risk management. He has advised healthcare and private equity clients about transactions strategies in pharmaceuticals, biotechnology, medical devices, drug delivery systems, and medical supplies globally. Tibor is also an experienced surgeon, with a PhD from the University of Aberdeen and an MBA from the University of Oxford. Kevin Bottomley, BSc. (Hons) (Senior Principal) Kevinis an experienced business development specialist, with over 25 years of experience in pharmaceutical and biotechnology companies involving senior positions in research, alliance management and business development. He has a proven track record of successful deal-making having worked at Roche, Quintiles, Hoechst (Sanofi-Aventis) and at Inpharmatica, where from 2001 to 2006 he was a Senior Director of Business Development. Kevin has a degree in Pharmacology from Kings College, University of London.
Pfizer
Pfizer Inc engages in the discovery, development, manufacture, and marketing of prescription medicines for humans and animals worldwide. Its Pharmaceutical segment offers Lipitor for elevated cholesterol levels in the blood; Norvasc for hypertension; Caduet for cardiovascular events; Chantix-Champix for smoking cessation; Lyrica for neuropathicpain; Geodon-Zeldox, a psychotropic agent; and Aricept for Alzheimers disease. It also provides Celebrex for arthritis pain, and inflammation and acute-pain; Vfend for esophageal-candidiasis and blood-stream-infections; Zyvox for bacterial-infections; and Selzentry-Celsentri for adults infected with only CCR5-tropic-HIV-1 detectable. In addition, this segment provides Viagra for erectile-dysfunction; Detrol and Toviaz for overactive-bladder; Camptosar for metastatic colorectal-cancer; Sutent, an oral multi-kinase inhibitor; Xalatan-Xalacom for open-angle-glaucoma and ocular-hypertension; and Genotropin for growth-disorders. The companys Animal Health segment offers parasiticides, anti-inflammatories, antibiotics, vaccines, antiemetics, and anti-obesity agents. It also provides Revolution/Stronghold for dogs and cats; Rimadyl for pain and inflammation associated with canine osteoarthritis and soft-tissue-orthopedic surgery; Clavamox-Synulox for skin and soft tissue infections; RespiSureOne-StellamuneOne to prevent pneumonia in swine; Bovi-Shield-Gold for reproductive and respiratory protection; Dectomax, an injectable and pour-on formulations; Draxxin, an antibiotic for infections in cattle and swine; and Excede to treat infections in dairy cows, beef cattle, and swine. Pfizer Inc. also involves in contract manufacturing and bulk pharmaceutical chemicals businesses. It serves doctors, nurse practitioners, physician assistants, pharmacists, hospitals, pharmacy benefit managers, managed care organizations, and government agencies. The company was founded in 1849 and is headquartered in New York, New York. .Wyeth is wise in the ways of health care. Operating in three segments, the company's largest unit is its Pharmaceuticals business, which sells antidepressant Effexor, arthritis drug Enbrel with partner Amgen, and vaccinePrevnar, as well as anti- infectives, nutrition and women's health products, gastroenterology drugs, and treatments for hemophilia and cardiovascular conditions. Its Consumer Healthcare unit produces such familiar over-the-counter brands as Advil, Centrum, Robitussin, and ChapStick. Subsidiary Fort Dodge Animal Health makes products for livestock and pets, including vaccines and parasite control products. Wyeth has agreed to be acquired by top drugmaker Pfizer for $68 billion