Pfizer Is Said to Plan a Deal for Its Off-Patent Drugs Unit
Pfizer has focused on drugs that are expected to maintain patent protections for some time, both those it has developed on its own and those it has acquired through takeovers.
The sign of Pfizer, the U.S. drug giant who manufactures the sex pill Viagra, is seen on a park bench in Ringaskiddy, County Cork. (Image: Reuters)
Pfizer is near a deal to combine its off-patent drugs division — which includes best-selling treatments like Viagra — with Mylan, the maker of the EpiPen emergency allergy treatment, to create a new giant in the business of drugs without patent protections, two people briefed on the matter said.
A deal could be announced as soon as Monday, according to these people.
The generic-drug industry has suffered for years in the face of falling prices, a trend that is often overlooked as many Americans struggle with paying for brand-name drugs.
Prices have declined for a range of reasons, in part because fewer blockbuster drugs, like the one-time Pfizer bestsellers like Lipitor and Viagra, are losing their patent protection. (Prices fall more slowly immediately after patents expire, then drop precipitously after that.) Pharmacies and wholesalers have also been banding together to create giant buying groups, creating more leverage against generic drug companies.
As a result, generic drugmakers like Teva and Mylan have struggled, leading some companies to shed their generics units or others to consolidate. Last fall, Novartis sold parts of its Sandoz generics unit to Aurobindo Pharma.
Under the terms of the potential all-stock transaction, Pfizer would spin off the off-patent unit and then merge it with Mylan to form a new publicly traded company, these people said. Mylan shareholders would own about 40% of the combined business. Pfizer would also receive about $12 billion in cash from the sale of new debt by the merged business.
Pfizer has focused on drugs that are expected to maintain patent protections for some time, both those it has developed on its own and those it has acquired through takeovers. Last month, for instance, it agreed to buy Array BioPharma, a maker of specialized cancer treatments, for about $10.6 billion.
That has also meant parting ways with lower-margin businesses. Last year, Pfizer agreed to combine its consumer health care unit with GlaxoSmithKline’s.
Pfizer’s off-patent division, known as Upjohn, reported about $3 billion in revenue in the first quarter this year. Mylan, which had a market value of $9.5 billion as of Friday, reported $2.5 billion in sales during the same period.
Michael J. de la Merced and Katie Thomas c.2019 New York Times News Service
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