Warning: Illegal string offset 'masthead_location' in /var/www/vhosts/hifcorporation.com/httpdocs/template/front/frame_template.tmpl.php on line 716
Mystery Banks Revealed
Health Investment & Finance

Warning: Illegal string offset 'first_name' in /var/www/vhosts/hifcorporation.com/httpdocs/template/front/db_content.tmpl.php on line 108

Warning: Illegal string offset 'o_first_name' in /var/www/vhosts/hifcorporation.com/httpdocs/template/front/db_content.tmpl.php on line 108

Warning: Illegal string offset 'middle_name' in /var/www/vhosts/hifcorporation.com/httpdocs/template/front/db_content.tmpl.php on line 109

Warning: Illegal string offset 'o_middle_name' in /var/www/vhosts/hifcorporation.com/httpdocs/template/front/db_content.tmpl.php on line 109

Warning: Illegal string offset 'last_name' in /var/www/vhosts/hifcorporation.com/httpdocs/template/front/db_content.tmpl.php on line 110

Warning: Illegal string offset 'o_last_name' in /var/www/vhosts/hifcorporation.com/httpdocs/template/front/db_content.tmpl.php on line 110

Warning: Illegal string offset 'picture' in /var/www/vhosts/hifcorporation.com/httpdocs/template/front/db_content.tmpl.php on line 111

Warning: Illegal string offset 'o_picture' in /var/www/vhosts/hifcorporation.com/httpdocs/template/front/db_content.tmpl.php on line 111

NewsWeek reported in January 26, 2009 that Pfizer will pay for the acquisition with $22.5 billion in cash, $23 billion in stock, and $22.5 billion in debt raised from five banks: Bank of America Merrill Lynch (BAC), Barclays (BCS), Citigroup (C), Goldman Sachs (GS), and JPMorgan Chase (JPM).

In other words, the company would pay two-thirds of the deal cost in cash and the remainder in stock, and an agreement could be reached by next week.   Pressrelease.

NEW YORK -- AP, Friday January 23, 2009.   Under pressure from big investors and analysts to make a bold move, beleaguered drugmaker Pfizer Inc. appears to have one in the works with reported talks to buy smaller rival Wyeth for $60 billion.

The Wall Street Journal reported Friday that the companies have been in talks for months, but said any deal is far from completion and the state of the global markets could undo any plans. Neither company was talking Friday.

If a deal goes through, the world's biggest drugmaker would see its revenue jump 50 percent and its profit climb, would vault into a premier position in two areas it's been coveting - biotech drugs and vaccines - and could slash costs with another round of job cuts in areas with significant overlap, from administration to research.

What are the chances a deal will close?

Pfizer Wyeth"I'd say maybe better than 50-50," said analyst Les Funtleyder of Miller Tabak & Co. Analysts say Pfizer, the maker of impotence drug Viagra and overactive bladder treatment Detrol, needs to do something dramatic to compensate for a revenue crash starting in November 2011. That's when the world's top-selling drug, $13 billion-a-year cholesterol fighter Lipitor, is expected to face generic competition.

At $60 billion, a deal between New York-based Pfizer and No. 12 drugmaker Wyeth of Madison, N.J., would be slightly less than the $66 billion Sanofi-Aventis merger from August 2004. Coincidentally, $60 billion is the same price Pfizer paid for its last big acquisition, Pharmacia Corp., in April 2003, said Erik Gordon, biomedical analyst and professor at University of Michigan's Ross School of Business.

"Part of this is a financial trick," he added. Wyeth has much more debt than Pfizer proportionally, he explained, and under complex but standard accounting practices, the combination would boost Pfizer's earnings per share, possibly by 20 to 30 cents per share. "That obviously isn't driving the deal, but it's a bonus," Gordon said.

Shares of Wyeth rose $4.91, or 12.6 percent, to $43.74. Pfizer shares were down most of the day but closed up 24 cents at $17.45.

Pfizer's research and development headquarters are in Connecticut in New London and Groton. Analysts said Friday that getting financing could be a big hurdle - it would have to be a cash-and-stock deal, with Pfizer still likely to have to borrow billions - and the Federal Trade Commission might require the companies to divest some products.

Pfizer Chief Executive Jeff Kindler, barely in the job for two years, had to take drastic action to get the company out of its doldrums: flat revenue, little to show for its $7.5 billion in yearly research spending and the expected loss of more than 70 percent of its 2007 revenue by 2015.

Its run of iconic blockbusters - Viagra, Lipitor, antidepressant Zoloft, plus blood-pressure blockbuster Norvasc - is a fading memory and its research labs have been so unproductive that it closed its mammoth research lab in Ann Arbor, Mich., about a year ago and now is laying off 800 more research staffers.

Lyrica for nerve pain and fibromyalgia is now a $2.5 billion-a-year product, but smoking cessation treatment Chantix hasn't lived up to expectations because of links to depression and suicidal thoughts. Perhaps worst of all, its high-profile effort to come up with a Lipitor successor flamed out when torcetrapib had to be axed in late-stage testing because it triggered heart problems.

Last fall, Pfizer publicly conceded that failure when it eliminated all new research on heart disease, the world's top killer.

Pfizer's stock price is barely one-third of its July 2000 peak of $48. Until now, the company has just been tinkering, cutting staff here, closing plants there and trimming its research portfolio.

Acquiring Wyeth would transform Pfizer almost overnight from primarily a pure pharmaceutical company into a broadly diversified health care giant, given Wyeth's huge presence and revenue in biotech drugs, vaccines including the blockbuster pneumococcal vaccine Prevnar, veterinary medicines and consumer health products from Advil to Robitussin.

Biotech drugs, produced in living cells, are seen as hot commodities these days because they generally command high prices and have little to no risk of generic competition. Wyeth's offerings include blockbuster rheumatoid arthritis drug Enbrel (sold jointly with Amgen Inc.), and hemophilia treatments Refacto, BeneFIX and Xyntha.

Pfizer WyethSo is absorbing Wyeth Pfizer's best option? Analysts are all over the map on that issue. "Such an acquisition makes strategic and financial sense," wrote Credit Suisse analyst Catherine Arnold, who has been supporting such a move since last March. "This deal would instantly make (Pfizer) a top-tier biologics player," boost cash flow and perhaps "mark the beginning of a year of sector consolidation."

Krensavage Partners money manager Mike Krensavage was lukewarm: "Wyeth is at an attractive enough price that I don't think Pfizer has too much to lose by pursuing this transaction." Steve Brozak of WBB Securities was more critical.

"This is a fix for the next 12 to 18 months. This still doesn't resolve the fundamental flaw in the large-pharma model," he said, referring to companies relying on blockbusters and narrowing research rather than forging lots of partnerships with small biotech firms and academic researchers to develop as many compounds as possible. "They're going to combine the two entities, eliminate redundancies and just focus on the bottom line earnings numbers, which doesn't work in the long run."

The two companies both announced last fall that they were trimming their research portfolios to fewer disease areas, and ended up with several that overlap: Alzheimer's disease, cancer, diabetes and related metabolic disorders, pain and inflammatory disorders such as arthritis. That could allow them to trim the least-promising drug compounds in each area, save research dollars and still have more possibilities in development.

Wyeth faces generic competition to its top seller, $3 billion-a-year antidepressant Effexor, in July 2010. Heartburn drug Protonix got generic competition last year, when antibiotic Zosyn also lost patent protection, but that drug still has no generic competitors. In any case, Wyeth's fortunes don't depend as heavily on any one drug as Pfizer's do on Lipitor, and most of its revenue now comes from biotech drugs, vaccines and veterinary medicines, not chemically synthesized pills.

Wyeth got three drugs approved last year - antidepressant Pristiq, Relistor for constipation caused by narcotic painkillers, and the hemophilia drug Xyntha - ending a grinding stretch where the increasingly cautious Food and Drug Administration repeatedly shot down its applications or demanded more information.
And Wyeth's stable of consumer products - including household names such as Chap Stick, Centrum vitamins, pain reliever Anacin and Preparation H - is nearly as valuable as the iconic brands Pfizer sold to Johnson & Johnson three years ago when it chose to get out of consumer health and focus on pharmaceuticals. Many analysts have called that a mistake.

With a wave of patent expirations hitting most big drugmakers over the next few years, Pfizer, Wyeth and plenty of competitors have been slashing jobs and other costs. Pfizer is widely expected to announce plans to eliminate one-third of its sales force when it announces fourth-quarter earnings next Wednesday, the day before Wyeth releases its results.

Contact details



Investor Information