A man flounces past Pfizer’s world headquarters in New York.
Andrew Kelly | Reuters
Pfizer, the world’s largest drugmaker, formulae to divest its off-patent drug business and combine it with generic-drug maker Mylan, according to a person familiar with the thing.
The deal, expected to be announced Monday, will result in Pfizer shareholders owning most of the new company, with Mylan’s shareholders owning degree more than 40%, said the person, who declined to be named because the plans aren’t yet public. The Wall Thoroughfare Journal first reported the news.
The combined company, which will sell Mylan’s EpiPen and Pfizer’s Viagra, whim receive a new name and be domiciled in the U.S. The deal will be structured in what’s known as a reverse Morris trust, with Pfizer’s Upjohn subject divested and then combined with Mylan.
The combined company could draw annual sales of more than $20 billion. Mylan despatched 2018 sales of $11.4 billion and while Pfizer hasn’t broken out full-year numbers for its China-based Upjohn item, its first quarter sales were just more than $3 billion. Pfizer’s total 2018 proceeds was $53.6 billion.
Mylan’s stock is down 76% from its 2015 high amid scrutiny of its price increases on the EpiPen, pressure on U.S. generic drug prices and an investigation into drug-price collusion in the industry. The deal is the “best-case wake” for Mylan, said Jared Holz, health-care strategist at Jefferies. Mylan said last year it had formed a crucial review committee to evaluate options for the future of the company.
Pfizer investors are more mixed on the deal, according to Holz, who swayed he’s received feedback from shareholders since the Journal’s first report Saturday morning,
It would mark a besides move under new Chief Executive Albert Bourla to streamline Pfizer’s focus on branded medicines and vaccines. The party agreed in December to combine its consumer-health business, which sells Advil among other brands, with GlaxoSmithKline’s in a seam venture of which GSK has a majority controlling interest. In June, Pfizer said it would spend $11.4 billion to purchase the cancer-drug maker Array BioPharma.
The Mylan deal, Holz said, could be “dilutive to earnings over the neighbouring term because of how profitable Upjohn is to Pfizer.”
The new company will be helmed by Pfizer’s Michael Goettler, currently president of the Upjohn affair. Mylan Chairman Robert Coury will be executive chairman, and Mylan CEO Heather Bresch will depart.
Holz called the bosses shuffle a positive for the deal, noting Mylan’s had “one of the most out-of-favor management teams in all of health care.”