July 15, 2002
Pfizer to acquire
Pharmacia Corporation for $60 billion in stock, strategically
positioning company for long-term leadership in rapidly changing
Fast-Growing Companies Have Partnered Since 1998 to Make Arthritis Medicine Celebrex The Most Successful New Pharmaceutical Launch Ever; Combined Company Expected to Have As Many As 12 Products With Annual Revenues Greater Than $1 Billion
Combined R&D Pipeline Will Have Nearly 120 New Chemical Entities In Development and Over 80 In-line Product Enhancement Programs; Pfizer Therapeutic Portfolio to Be Enhanced by Pharmacia's Strength in Oncology, Ophthalmology and Endocrinology
Transaction Expected To Be Non-Dilutive to Adjusted Diluted Earnings Per Share in 2003 and Accretive Thereafter; Peak Year Synergies of $2.5 Billion to Be Achieved By 2005
Pfizer to Expand Existing Share Purchase Program to $16 Billion;
Pharmacia Transaction Is Major Redeployment of Pfizer Assets Into Core Pharmaceuticals Business
New York, N.Y. and Peapack, N.J., July 15 -- Pfizer Inc and Pharmacia Corporation jointly announced today that they have signed a definitive agreement providing for Pfizer to acquire Pharmacia in a stock-for-stock transaction valued at $60 billion, expanding the company's core strengths in pharmaceuticals and health care.
Pharmacia also announced that its Board of Directors intends to proceed with its previously announced spin-off of its remaining 84% ownership of Monsanto to its current shareholders. After the Monsanto spin-off, Pfizer will exchange 1.4 shares of Pfizer common stock for each outstanding share of Pharmacia stock in a tax-free transaction valued at $45.08 per Pharmacia share, based on Pfizer's July 12 closing stock price of $32.20. This transaction represents a 44% premium based on the average closing prices of the two stocks over the last 30 days, adjusted for the Monsanto spin-off.
"This is an extraordinary opportunity to combine two of the fastest-growing and most innovative pharmaceutical companies and to position Pfizer for sustained long-term leadership of the global pharmaceutical industry," said Hank McKinnell, chairman and chief executive officer of Pfizer. "By combining with Pharmacia, we are ensuring that our core capabilities in the discovery, development and commercialization of new medicines are strong around the world.
"Our industry is changing rapidly. Remarkable advances in the scientific understanding of the origins of disease will sharply increase drug discovery targets and will create major opportunities for Pfizer. But it is increasingly costly to fund the high-risk and long-term research required to develop pharmaceutical products. At the same time, payers and providers want high value and affordable medicines.
"We intend to meet these challenges head on. Our new company will be positioned to deliver a stream of innovative new products and cost-effective health care solutions. With Pharmacia, we will have the products, pipeline, scale, and financial flexibility to extend our leadership."
"Combining Pfizer with Pharmacia is a strategic opportunity that immediately creates a global pharmaceutical company with unsurpassed resources and capabilities," said Fred Hassan, chairman and chief executive officer of Pharmacia Corporation.
"Our companies are already highly effective partners as shown by the extraordinary success of the COX-2 products. A strategic combination with the industry leader, Pfizer, will now give us the opportunity to maximize the potential of both our current products and our pipeline.
"We are proud of our Pharmacia people, whose world-class capabilities have enabled us to deliver outstanding performance and value. We are also pleased that our shareholders will receive not only an immediate premium for their shares, but also the opportunity to participate in Pfizer's long-term growth with its truly outstanding product line and exciting pipeline."
Upon closing of the transaction, Mr. Hassan will become Vice Chairman of Pfizer, assisting with integration and corporate strategy, and a member of the Pfizer Board of Directors.
Dr. McKinnell cited other key attributes of the combined company:
●A product portfolio unequalled in depth and breadth.
・The companies' combined product portfolios are highly complementary.
・By combining with Pharmacia, Pfizer will have the opportunity to support as many as 12 products with annual revenues greater than $1 billion.
・Category leadership includes key products in cardiovascular, endocrinology, neuroscience, arthritis and inflammation, infectious diseases, urology, ophthalmology and oncology.
・The combined portfolio will have a strong patent position.
●A stronger pipeline and expanded R&D program.
・The combined company will have an R&D pipeline containing nearly 120 new chemical entities in development and over 80 additional projects for product enhancements.
・The companies' combined R&D budget for 2002 exceeds $7 billion, making it by far the largest privately funded biomedical research organization in the world.
・With Pharmacia, Pfizer plans to file 20 new drug applications with global regulatory authorities over the next five years.
・Pfizer's late-stage pipeline will be enhanced by major Pharmacia products that include eplerenone, a new category of treatment for cardiovascular diseases; parecoxib, the first injectable selective COX-2 inhibitor; and CDP-870 for rheumatoid arthritis.
●Enhanced scale and financial flexibility.
・Pfizer and Pharmacia will have combined annual revenues for 2002 of approximately $48 billion, including $39 billion in prescription sales.
・Already the leading pharmaceutical company in the United States and Canada, Pfizer with Pharmacia will move from fourth to first in Europe; from third to first in Japan; and from fifth to first in Latin America in pharmaceutical sales.
・Synergies will be phased in, starting at $1.4 billion in 2003 and increasing to $2.2 billion in 2004 and $2.5 billion in 2005.
"By combining Pfizer with Pharmacia, we will have the financial and human resources to bring new product opportunities to the market and to fund them to their full potential. We met or exceeded all of our targets in the integration of Warner-Lambert, and we anticipate another successful integration given that our two organizations have worked so successfully on Celebrex and Bextra," Dr. McKinnell said.
Key Product Highlights
Karen Katen, executive vice president of Pfizer and president of Pfizer's global pharmaceutical business, said: "The combination of Pharmacia's portfolio with Pfizer's brand-name franchises represents a superb opportunity to strengthen our relationships with prescribing physicians and continue patient education and outreach focused on helping people live longer and healthier lives. With Pharmacia, we are ensuring that millions of patients around the world will continue to benefit from our skill in developing therapies for cancer, cardiovascular disease, mental health, respiratory and infectious diseases, eye disease, and many other areas of medical need. Our medical mission has never been more important, and as we look ahead with excitement and anticipation, I am especially proud of Pfizer people and their dedication to the needs of patients."
Ms. Katen reviewed the key new products that will be added to Pfizer's portfolio of major products:
・In 1999, Pfizer and Pharmacia jointly introduced the anti-inflammatory Celebrex, the first-in-class selective COX-2 inhibitor. It was the most successful new product launch ever in the industry. This medicine has become the number one branded treatment for arthritis in the world, and it has been prescribed to more than 35 million patients worldwide. With its recent approval in the U.S. for acute pain and for dysmenorrhea, Celebrex has the most complete range of approved indications among selective COX-2 inhibitors on the market today.
・Pfizer and Pharmacia sales representatives began promoting a second selective COX-2 inhibitor, Bextra, in April, 2002. Together, Celebrex and Bextra now account for over 23% of new NSAID prescriptions. In addition, launches of Bextra and parecoxib (branded Dynastat in Europe) are in progress in a number of international markets. Pharmacia is currently conducting studies to support the NDA filing for parecoxib in the U.S.
・Pharmacia's Xalatan (latanoprost ophthalmic solution) lowers eye pressure in patients with open-angle glaucoma not controlled by other medications. This revolutionary treatment for glaucoma is now the leading ophthalmic prescription medicine in the world.
・Pharmacia's Genotropin, the world's top-selling recombinant growth hormone, is indicated for the treatment of children and adults with growth hormone deficiency.
・Pharmacia also has world-class oncology products, which include Camptosar for treatment of metastatic colorectal cancer as well as therapies for breast cancer.
Most major Pfizer products are patent protected through this decade. For example, U.S. patents for Lipitor expire in 2010, and for Viagra in 2011. Pharmacia's most significant U.S. patents expire in the next decade (Celebrex in 2013, Bextra in 2015).
Peter B. Corr, Ph.D., senior vice president science and technology for Pfizer, said: "We will sharpen the focus of our R&D efforts to concentrate on compounds that can be differentiated as truly innovative in an increasingly competitive marketplace, deliver our joint late-stage programs to registration and build our discovery and exploratory human development programs for the future. The practical impact of combining with Pharmacia is very simple: we will have many more candidates, more financial flexibility and human resources to support them, and the best chance to find the maximum number of innovative medicines. We will also expand our presence into new therapeutic categories, including the addition of strong oncology and ophthalmology products to Pfizer's existing R&D programs in these areas. With our expanded global scientific and medical resources, I am very confident that we will deliver more and more medical breakthroughs to patients who look to us for new treatments and cures for a host of serious diseases."
Pharmacia's pipeline includes treatments for cardiovascular disease, CNS disorders, ophthalmic conditions, infectious diseases, urology, endocrinology, oncology and arthritis/inflammation. Pharmacia has four compounds undergoing regulatory review and five Phase III candidates.
David Shedlarz, executive vice president and chief financial officer of Pfizer, said: "This acquisition underscores our commitment to redeploying our substantial financial resources to fund growth opportunities in our core pharmaceuticals business. Our combination with Pharmacia will greatly strengthen our global pharmaceuticals business and through it we will gain valuable efficiencies and productivity improvements."
Mr. Shedlarz cited the following other factors:
・Pfizer's shareholders will own approximately 77% of the combined company, and Pharmacia's shareholders will own approximately 23%. The transaction is expected to close by year-end 2002, subject to the approval by shareholders of both companies, necessary governmental and regulatory approvals and other usual and customary closing conditions.
・Excluding the effects of purchase accounting and merger-related expenses, the transaction is expected to be non-dilutive to Pfizer's 2003 adjusted diluted earnings per share and $0.06 accretive in 2004. (Adjusted earnings is defined in Appendix A.)
・In a second-quarter earnings report released this morning, Pfizer reaffirmed its guidance of double-digit revenue growth in 2002. The company refined its guidance for 2002 diluted EPS, excluding the cumulative effect of an accounting change, certain significant items and merger-related costs, to $1.58, or 21% growth, which is within the range of earlier guidance. Pharmacia released a statement this morning that expresses comfort with consensus estimates for the second quarter 2002, and reaffirms guidance of $1.52-1.57 EPS for the full year 2002.
・From 2002 to 2004 on a stand-alone basis, Pfizer expects compounded annual revenue growth of 11%, growth in net income of 14%, and growth in diluted EPS of 16%, excluding the cumulative effect of the change in accounting principle, certain significant items and merger-related costs.
・On a pro forma basis, the combined entity will have $11.9 billion in adjusted earnings and $47.9 billion in revenues in 2002. It is forecast to have a compounded annual growth from 2002 to 2004 of 10% for revenues and 19% for adjusted earnings. Pro forma revenue of the entity is forecast to increase to $57.8 billion, and adjusted earnings to $16.7 billion ($2.18 per share), by 2004. Adjusted diluted earnings per share of $2.18 in 2004 are $0.06 higher than Pfizer's stand-alone estimate of $2.12. (See Appendix B.)
・Indicative of the exceptional financial strength of the company, Pfizer said that it would expand its previously announced share repurchase program from $10 billion to $16 billion via open market purchases, as circumstances and prices warrant, as well as accelerate the buyback period with the anticipation of completing it in 2003.
concluded, "This is a major step toward fulfilling our
mission of becoming the most valued company to patients,
customers, colleagues, investors, business partners, and the
communities where we work and live. As a major global
pharmaceutical company, we understand the responsibilities of
leadership, and we will continue to address affordability and
access issues. Our continuing outreach will include innovative
policy solutions, as well as expanding public/private
partnerships that address global public health issues.
"By joining with Pharmacia, we will remain at the forefront of medical innovation, working on behalf of patients to ensure they receive the benefits of breakthrough medicines."
Pharmacia Newsroom http://www.pharmacia.com/newsroom/script_press.asp?id=330
Frequently asked questions
of Monsanto →
Q. Please explain the upcoming spin-off of the remaining 85% of Monsanto to Pharmacia Corporation shareholders. Why is Pharmacia doing this?
A. Following the merger between Monsanto and Pharmacia & Upjohn in March 2000, the business was divided into a pharmaceutical unit and an agrochemical unit. Monsanto consists of the operations and the assets and liabilities that were transferred to the agrochemical unit. On November 28, 2002, Pharmacia Corporation's Board of Directors approved the intent to spin-off the remaining 84% of Monsanto in a tax-free dividend to Pharmacia shareholders of record. The spin-off of Monsanto will allow both Pharmacia and Monsanto to devote management time and efforts to the core strategies of each business. We believe that Pharmacia and Monsanto will become stronger and more competitive as a result of the complete separation.
Q. As a result of the spin-off, will there be a distribution to shareholders?
A. On July 18th, Pharmacia Corporation's Board of Directors declared that Pharmacia shareholders of record would receive a fraction of a share of Monsanto for every 1 share of Pharmacia Corporation common stock owned as of the record date, July 29, 2002. The ratio will be determined by dividing Pharmacia's total shares in Monsanto by the total number of shares outstanding of Pharmacia at 5:00 PM Eastern time on July 29, 2002. The distribution of the Monsanto shares will occur on August 13, 2002.
Q. Approximately how many shares of Monsanto common stock will Pharmacia shareholders be entitled to receive?
A. You will be entitled to receive approximately 0.17 shares of Monsanto common stock for each share of Pharmacia common stock for which you are the record holder at 5:00 PM Eastern time on July 29, 2002. This approximation is based on the number of shares of Monsanto owned by Pharmacia (220,000,000) and the number of shares outstanding (1,288,978,456) of Pharmacia on July 17, 2002. The final number of shares of Monsanto common stock that you will be entitled to receive for each share of Pharmacia common stock you own will be based on the actual number of Pharmacia shares outstanding at 5:00 PM Eastern time on July 29, 2002
Q. When will the spin-off occur?
A. The Pharmacia Corporation Board of Directors declared the tax-free dividend on July 18, 2002. The distribution date is expected to occur on August 13, 2002, for Pharmacia Corporation shareholders of record at 5:00 PM Eastern time on July 29, 2002.
Q. When will the dividend be paid?
A. Pharmacia will pay the dividend on August 13, 2002 by releasing its shares of Monsanto common stock to be distributed in the spin-off to Mellon Investor Services, our transfer and disbursing agent. As of 5:00 PM Eastern time on August 13, 2002, Mellon Investor Services LLC will begin the distribution process. If you are a registered shareholder, all full and fractional shares to which you are entitled will be placed directly into "book entry" in your Mellon Investor Services LLC account. If you hold less than 6 shares of Pharmacia Corporation stock on the record date, you will receive cash-in-lieu and a check will be sent to the shareholder's address of record.
If you hold your shares of Pharmacia common stock through a bank or brokerage firm, the bank or brokerage firm will then electronically credit your account for the shares of Monsanto common stock that you are entitled to receive. We anticipate that this will take from three to eight business days after August 13, 2002.
Q. What will be the impact on my Pharmacia Corporation stock when I receive my distribution of Monsanto?
A. You will continue to own the same number of Pharmacia Corporation shares after the spin-off of Monsanto. At the time of the spin-off, you will receive a fraction of a share of Monsanto for each share of Pharmacia Corporation stock that you own. You should expect the Pharmacia stock price to be reduced by the value attributed to the Monsanto stock that you receive at the time of the spin-off.
Q. What is the tax basis for the Monsanto common stock that I will be receiving?
A. Further information will be provided in the Information Statement that will be mailed to shareholders after July 29, 2002 and Tax Information Statement that will be mailed to shareholders after August 13, 2002. Pharmacia shareholders are, however, urged to consult their own tax advisors to determine the particular tax consequences of the spin-off to them, including the effect of any state, local or foreign income and any other tax laws.
Q. What happens to the tax basis of the Pharmacia common stock that I currently hold?
A. For U.S. federal income tax purposes, the tax basis in your Pharmacia common stock will be decreased by the portion allocated to the Monsanto common stock. Further information will be provided in the information Statement that will be mailed to shareholders after July 29, 2002 and Tax Information Statement that will be mailed to shareholders after August 13, 2002. Pharmacia shareholders are, however, urged to consult their own tax advisors to determine the particular tax consequences of the spin-off to them, including the effect of any state, local or foreign income and any other tax laws.
Q. What happens to any fractional shares?
A. If you are a registered shareholder of Pharmacia common stock, all fractional shares to which you are entitled will be placed into "book entry" in your Mellon Investor Services LLC account. If you hold less than 6 shares of Pharmacia Corporation stock on the record date, you are entitled to receive cash-in-lieu and a check will be sent to the registered shareholder at the address of record.
If you hold your Pharmacia common stock through a bank or brokerage firm, you will receive whole and/or fractional shares of Monsanto common stock that you are entitled to receive based on the policies and practices of your bank or brokerage firm. We encourage you to contact your bank or broker if you have any questions regarding their policies and practices.
Q. What are the tax consequences of the spin-off?
A. The spin-off generally will be tax-free to Pharmacia shareholders for U.S. federal income tax purposes, except in those cases in which cash-in-lieu is received. Those cash proceeds, which will be negligible, will be taxable. Pharmacia shareholders are, however, urged to consult their own tax advisors to determine the particular tax consequences of the spin-off to them, including the effect of any state, local or foreign income and any other tax laws.
Q. Will Pharmacia shareholders have to take any action in order to receive my distribution of Monsanto shares?
A. No. If you are the record holder of Pharmacia common stock at 5:00 PM Eastern time on July 29, 2002, you will be entitled to receive your distribution of Monsanto shares, as described above, without any further action.
Q. Do I have a choice between taking a distribution of Monsanto common stock or receiving a cash dividend?
A. No, you will receive Monsanto common stock and/or cash-in-lieu of fractional shares as described above.
Q Will I receive a certificate as part of the distribution to which I am entitled?
A. No certificates for Monsanto shares will be sent to shareholders as part of this distribution. All whole and fractional shares to which you are entitled will be placed into "book entry" in your Mellon Investor Services LLC account. If at any time you want to receive a physical certificate evidencing your whole shares of Monsanto common stock, you may do so by contacting Mellon Investor Services LLC, the Monsanto transfer agent and registrar.
Q. I was a shareholder of record of Pharmacia Corporation at the time of the October 18, 2000, partial Initial Public Offering of Monsanto. I did not receive any distribution of stock/cash at that time. Should I have?
A. There were no distributions made to Pharmacia Corporation shareholders of record at the time of the partial IPO on October 18, 2000.
Q. How can I get more information on Monsanto?
A. If you are a holder of Monsanto stock or have any questions about the company, you may access their website, www.monsanto.com or telephone Mellon Investor Services LLC at (888) 725-9529.
Q. Who is the transfer agent for the Monsanto?
A. Mellon Investor Services LLC is Monsanto's transfer agent. To reach Mellon regarding Monsanto, please telephone Mellon at (888) 725-9529 or refer to the Monsanto website, www.monsanto.com.
Q. How can I buy more shares of Monsanto?
A. Stock in Monsanto can be purchased only through a broker at this time.
Q. What are my options if I choose not to hold Monsanto stock?
A. Once the distribution of the Monsanto stock is issued to your account, you can request a sale or transfer of the stock through Monsanto's transfer agent, Mellon Investor Services LLC, if they hold your shares. If a brokerage firm holds your shares, your intermediary will be able to assist you with your request. Proceeds from the sale of your Monsanto stock are subject to US federal income tax.
Q. I am holding Pharmacia shares in Sweden. Will Monsanto be listed on the Stockholm exchange? How does the spin-off affect me?
A. Monsanto currently has no intention of listing its shares on Stockholmborsen or disseminating information about Monsanto in Sweden. For more information on the impact of the spin-off, Swedish shareholders should contact the investment bank D. Carnegie AB at 020 46 00 46.
Q. Will Pharmacia shareholders be receiving further information about the dividend distribution prior to the distribution date?
A. Yes. Shortly after July 29, 2002, Pharmacia's shareholders will receive an Information Statement describing the dividend distribution. Holders of Pharmacia's Swedish depositary receipts will receive shortly after July 29, 2002 an information brochure containing substantially similar to the Information Statement (except for such differences in connection with the different circumstances applicable to Pharmacia's Swedish depositary receipt holders).
Q. How does this spin-off impact the merger between Pharmacia & Pfizer, Inc.?
A. The Monsanto spin-off will occur before the Pfizer acquisition is completed. As a result, there is no impact from the Monsanto spin-off on the Pfizer transaction.
Q. How does the Pfizer, Inc. acquisition of Pharmacia impact the number of shares of Monsanto I will receive?
A. The Monsanto spin-off will occur before the Pfizer acquisition is completed. The Pfizer acquisition of Pharmacia has no impact on the number of Monsanto shares that will be received.
Q. What will happen to Employee Stock Options?
A. In late July a mailing will be sent to all Pharmacia Corporation and Monsanto employees to whom Stock Options would be applicable. If you did not receive this communication or if you have further questions, please contact your respective Pharmacia Corporation or Monsanto Stock Options Office.
"Pharmacia seen spinning off Monsanto" → spin-off of Monsanto 変遷図
NEW YORK, Nov 12 (Reuters) - Pharmacia Corp. will likely spin off Monsanto Co. to shareholders next spring as the drug company seeks to rid itself of its volatile agricultural business, analysts said.
Pharmacia completed its acquisition of Monsanto in March last year. Its aim was to gain access to Monsanto's drug unit, which developed the blockbuster arthritis drug Celebrex. Under the transaction, however, Pharmacia also acquired the agricultural business.
The requirement to hold on to Monsanto ends in March 2002, and analysts believe Pharmacia will waste no time in getting rid of a business which develops genetically enhanced crops and whose main product is Roundup herbicide. Pharmacia has already sold off 15 percent of Monsanto.
``We expect that Pharmacia will sell or spin off the remaining 85 percent of Monsanto that it owns,'' said Jami Rubin, an analyst at Morgan Stanley. ``A significant portion of Pharmacia earnings uncertainty comes from the ag business.''
Pharmacia, which declined to comment on its plans for Monsanto, has nonetheless made no bones about its lack of interest in the agricultural business. In the third quarter the company said Monsanto shaved 3 cents from its earnings per share.
``Pharmacia makes clear that they are first and foremost a drug company,'' said Steve Scala, an analyst at SG Cowen Securities Inc.
Peapack, New Jersey-based Pharmacia will most likely spin off Monsanto to shareholders, analysts said. That's because Pharmacia is unlikely to find a buyer for Monsanto, which has a market value of $7.9 billion.
``Monsanto's too expensive,'' said William Young, an analyst at Credit Suisse First Boston, though he added that ``you can never rule anything out.''
Monsanto executives were not immediately available for comment. The company's shares were down 53 cents, or 1.8 percent, at $29.43 in late Monday trading on the New York Stock Exchange.
Pharmacia's shares are currently trading at about $40.00, of which about $5.00 is accounted for by the agricultural business, analysts said. In the event of a spinoff, Pharmacia shareholders would receive a dividend or coupon for their Monsanto shares, to do with as they wish.
Analysts said it would be bad for Pharmacia if shareholders didn't sell their Monsanto stock, as it is that part of the business that is hurting Pharmacia.
``Investors buy Pharmacia because they want the visibility and earnings stability of a pharmaceuticals company,'' said Rubin. The agricultural business is far more volatile.
June 19, 2000
FTC GRANTS FINAL CLEARANCE FOR
PFIZER/WARNER-LAMBERT MERGER, TRANSACTION COMPLETED TODAY
New Pfizer Combines Complementary Pharmaceutical Portfolios, Strong Research Platforms and Outstanding Global Sales and Marketing Capabilities
NEW YORK, June 19 -- Pfizer Inc said today that the Federal Trade Commission (FTC) has accepted a consent decree clearing the way for the company's merger with Warner-Lambert. The merger was completed today.
Under the terms of the merger agreement, Pfizer is exchanging 2.75 shares of Pfizer common stock for each share of Warner-Lambert common stock in a tax-free transaction.
With a market capitalization of $302 billion, Pfizer now ranks 5th among the world's largest companies. The company estimates year 2000 revenues of more than $31 billion, and anticipates compound annual diluted earnings per share growth of at least 25 percent from 1999 to 2002, excluding unusual gains and charges as well as merger-transaction, integration and restructuring charges.
"This is a defining moment for Pfizer, completing the first major pharmaceutical industry merger executed from a position of strength for both companies involved," said William C. Steere, Jr., Pfizer chairman and chief executive officer. "Combining the two fastest-growing companies in the industry creates a global leader in the discovery of health and consumer products that will benefit millions around the world."
In both 1999 and the first quarter of 2000, Warner-Lambert and Pfizer were, respectively, the first and second fastest-growing major research-based pharmaceutical companies. With the merger completed, Pfizer is the largest pharmaceutical company in the world in terms of sales, and the new company's rate of income growth will be the highest among the major companies in the industry, the company said.
"We are very pleased that one of the largest mergers in business history has proceeded smoothly," Mr. Steere continued. "This reflects the complementary nature of Pfizer and Warner-Lambert, as well as the hard work of thousands of people from both companies to accomplish this merger."
The new Pfizer will have outstanding growth prospects based on:
Since 1996, Pfizer and Warner-Lambert have worked in partnership to launch and promote the cholesterol-lowering agent Lipitor. Lipitor is the number one statin worldwide and the fastest-growing product in its category. Lipitor was launched in May in Japan, the world's second-largest pharmaceutical market.
Henry A. McKinnell, Ph.D., president and chief operating officer of Pfizer, who is leading the integration process, said: "Because of the remarkable similarities between the two companies and our successful partnership on Lipitor, the transition- and integration-planning process has been rapid and efficient. We therefore expect to make quick progress in rapidly bringing together the best of both companies to create a new Pfizer."
John F. Niblack, Ph.D., vice chairman and president of Pfizer Global Research and Development, said: "Our research pipeline is robust, with 131 compounds in development in areas including central nervous system disorders, oncology, cardiovascular disease, metabolic disease and infectious disease. We have the scope and scale to discover many breakthrough medicines in the 21st century."
S. Morgan Morton, senior vice president of Pfizer and president of the Warner-Lambert Consumer Group, said: "The strong consumer health business provides an excellent platform for future switches of prescription-only medicines to over-the-counter (OTC) brands. We have done this successfully with Zantac 75 and will be seeking additional opportunities."
The FTC has directed Pfizer to divest its interest in RID, a treatment for head lice that competes with NIX, a Warner-Lambert product, and to divest its rights to an anti-cancer compound in early clinical development, which is similar to a compound at a similar stage at the Parke-Davis research unit of Warner-Lambert. RID is under contract to be sold to an undisclosed party and rights to the research compound have been turned over to OSI, Inc., the research collaborator on the project. Pfizer will continue the anti-cancer development program initiated by Parke-Davis, which has become part of the Pfizer Global Research and Development organization through the merger, and will continue other research collaborations with OSI.
Also under terms of the FTC order, Warner-Lambert will end its agreement to co-promote Celexa, which competes with Pfizer's Zoloft, a selective serotonin re-uptake inhibitor for the treatment of depression, obsessive-compulsive disorder and panic disorder. Finally under terms of the order, Warner-Lambert is under contract to divest its interest in Cognex, an Alzheimer's disease treatment that competes with Aricept, which Pfizer co-promotes with Eisai Co., Ltd., which discovered the product.
Pfizer said it did not expect any of these divestiture activities to have a material impact on the current or future performance of the company.
Pfizer expects to realize at least $1.6 billion in merger-related cost-savings and efficiencies by 2002. Cost savings will come from eliminating organizational redundancies; optimizing global manufacturing; and centralizing separate distribution systems. The company will also leverage a combined $12 billion in annual external purchases.
"By every standard," Mr. Steere said, "the new company will be better as well as bigger, as these two companies?with records of success going back to the 19th Century?accelerate their growth and speed the process of innovation. We will be leaders in providing outstanding returns to our shareholders, discovering and developing outstanding medicines and consumer products, exceeding the expectations of our customers, attracting and developing the best workforce and contributing to the communities in which we live and work. The creation of this great new company marks the most important event in Pfizer's 151-year history."
Forward-looking statements in this document should be evaluated together with the many uncertainties that affect our business, particularly those mentioned in the cautionary statements in Part 1 of our 1999 Form 10-K, which we incorporate by reference.
Shareholders Vote to Approve Merger with Pfizer Inc.
Pharmacia Corporation (NYSE: PHA) today announced that its shareholders voted to approve the company's proposed merger with Pfizer Inc. at a special meeting of shareholders meeting held in Wilmington, Delaware.
Approximately 71 percent of outstanding shares, and 99 percent of the total votes cast, were cast in favor of the transaction.
The positive vote by Pharmacia shareholders follows a meeting of Pfizer shareholders on Dec. 6 at which more than 96 percent of the votes were cast in favor of the transaction.
As previously reported, the companies continue to make progress in obtaining other approvals necessary to complete the transaction in the first quarter of 2003.
Pharmacia Corporation (NYSE:PHA) is a top-tier global pharmaceutical company whose innovative medicines and other products save lives and enhance health and wellness. Pharmacia's 43,000 people work together with many diverse stakeholders to bring these benefits to people around the world, and to create new health solutions for the future.
EU to End
Pfizer-Pharmacia Probe Soon
The European Commission has re-started the clock on Pfizer Inc's proposed $60 billion buy of Pharmacia Corp and will finish work on the deal by month's end, sources familiar with the situation said on Thursday.
Originally the Commission was to have finished work by late November, but stopped the clock that month seeking more information on the planned takeover.
The U.S. Federal Trade Commission is also doing an in-depth review of the takeover.
Pfizer, the New York-based maker of erectile dysfunction drug Viagra, struck the deal with Pharmacia in July 2002, and the companies expect to close the transaction in the first quarter of this year once they win antitrust approval.
Pfizer is already the world's biggest drugmaker. With Pharmacia, of Peapack, New Jersey, the new firm would become a pharmaceutical behemoth with 11 percent of global market share.
The list of top 10 drugmakers changes dramatically from decade to decade as former heavyweights fade and are swept up in mergers.
But the mergers tend to be complicated, because regulators try to ensure that the combined company does not unduly dominate a specific class of medicines.
The Pfizer-Pharmacia deal would make it 50 percent bigger, in terms of market share, than its nearest rival, Britain's GlaxoSmithKline Plc, whose creation two years ago was only approved after an extended probe.
Industry analysts said they did not see any significant areas of overlap to derail the Pfizer-Pharmacia deal, but they said regulators were clearly paying close attention to all aspects of the tie-up.
Some believe regulators may pressure Pfizer to divest an experimental incontinence drug, called darifenacin, because Pharmacia already markets an incontinence drug, Detrol LA, that boasts annual sales of $500 million.
PFIZER AND PHARMACIA
COMBINE OPERATIONS, CREATING WORLD'S LARGEST RESEARCH-BASED
Company To Drive Top-Line Growth Through Innovative New Products, Improved R&D Productivity, And Leadership Position In All Major Regions Of The World
Pfizer To Place Strong Emphasis On Partnerships With Governments And Health Care Providers To Expand Patient Access To New Medicines
Combined Company Expects More Than 1 Billion Prescriptions Of Its Medicines To Be Written Annually; R&D Investment To Lead The Industry; Donations Of Cash And Medicines To Patients In Need Exceeds $2 Million A Day
Pfizer Inc and Pharmacia Corporation combined operations today, bringing together two of the world's fastest-growing and most innovative companies. The new Pfizer is the world's leading research-based pharmaceutical company.
The combination expands Pfizer's global pharmaceutical leadership, broadens its product base, and bolsters its research and development capacity. In addition to pharmaceuticals, Pharmacia enlarges Pfizer's portfolio of leading consumer healthcare brands and establishes its animal health business as number one in the world.
"Today we go forward as a single company, providing more products to help more patients than any other pharmaceutical company has ever done before," said Pfizer Chairman and Chief Executive Officer Hank McKinnell. "On any given day, we estimate that nearly 40 million people around the world are treated with a Pfizer medicine. Our new company is the global leader in discovering, developing and delivering innovative medicines and healthcare solutions essential to improving global public health and addressing unmet medical needs."
Trading of the combined company began today on the New York Stock Exchange (NYSE:PFE). By market capitalization, Pfizer is now the world's third largest company.
Combined Product Portfolio Features 14 Therapeutic Leaders; Sales Force is "Distinct Advantage" for Sustaining Growth
Pfizer's portfolio of innovative medicines spans diseases as diverse as cancer, epilepsy, depression, and high blood pressure, and includes 14 medicines that are number one in their therapeutic category.
"With Pharmacia, we are bringing together two strong and complementary product portfolios that combined will give us unprecedented therapeutic reach. Further, our increased resources, in terms of science as well as sales and marketing expertise, will allow us to enhance the value of that portfolio for the good of all of our stakeholders, particularly healthcare professionals and patients," said Karen Katen, executive vice president and president of Pfizer's global pharmaceutical business.
"The depth and experience of the Pfizer sales force is a distinct competitive advantage for sustaining growth, and we'll use that to increase the already strong positions of Pharmacia in oncology, endocrinology and ophthalmology. Our united sales force will also be positioned to grow the COX-2 portfolio of Bextra, Celebrex and parecoxib (Dynastat) around the world."
In an environment of increased global interdependency, the need to improve global healthcare has never been greater, Katen said. For example, more than 12 million people worldwide die each year from heart disease and stroke; an estimated 375 million people worldwide suffer from some form of arthritis, and glaucoma affects an estimated 66 million people worldwide.
"Our cholesterol-lowering medicine, Lipitor, is a perfect example of the challenge and opportunity we face. Today, it benefits 28 million patients. But there are an estimated 150 million people worldwide who still are underdiagnosed or undertreated for high cholesterol. It is incumbent upon us to reach these people, and to make all of our therapies and treatments available to people in need in every community.
"Overall, it's a matter of responding to unmet medical needs. Patients want and need the healthcare information, the services and the medicines that will enable them to live longer, healthier lives. And that is exactly what we at Pfizer can deliver," Katen said.
While Pfizer has 10 medicines with individual sales of over $1 billion in 2002, meeting unmet medical needs requires also investing in products that serve smaller, but underserved patient populations. One example is Vfend, a new treatment for rare but very serious invasive fungal infections. Pfizer is also partnering with Serono Inc. to offer a new multiple sclerosis treatment, Rebif, to patients with multiple sclerosis. Rebif was discovered and developed by Serono.
Expanded Global Leadership for Pharmaceuticals, Consumer Products and Animal Health
Pfizer will be the human pharmaceutical leader in all major geographic markets: the United States, Canada, Europe, Latin America, Africa, the Middle East and Japan.
"We are positioned to expand our global leadership on all fronts. We will continue to train and develop the leading sales force in the industry; this will facilitate the expanded product rollouts in important markets such as Japan, where three major Pharmacia products - Detrol, Celebrex and Inspra - await regulatory approval. We are developing new partnerships with governments, policy makers and healthcare organizations in Europe to highlight the importance of healthy aging, and we are actively seeking productive partnerships with forward-looking healthcare institutions around the world," Katen said.
Pfizer Consumer Health will be among the largest global consumer healthcare businesses, with a portfolio spanning oral care, tobacco dependence, upper respiratory conditions (including allergy and sinusitis), hair growth, digestive health, eye care and skin/first-aid care. Among the many well-known brands are Listerine, Nicorette/Nicotrol, Benadryl, Sudafed and Rogaine.
Pfizer Animal Health (PAH) is the world's leading discoverer and marketer of products to prevent and treat diseases in livestock and companion animals. PAH's Revolution/Stronghold is the first and only topical medicine that protects both cats and dogs against fleas and heartworm through simple, once-a-month administration. Pharmacia's Excenel/Naxcel is an anti-infective for respiratory disease and infections in livestock and companion animals.
Pfizer R&D to Apply New Technologies, Focus on Productivity
Pfizer's Global Research and Development (PGRD) is the largest privately funded biomedical organization in the world. PGRD has over 200 projects in the development pipeline, including over 100 distinct new molecular entities and more than 100 projects to evaluate new indications or delivery systems for currently marketed medicines. Pfizer expects to submit 20 new major medicines for regulatory approval over a five-year interval through 2006. Pfizer is currently developing new drugs for the treatment of atherosclerosis, diabetes, osteoporosis, breast cancer, neuropathic pain, epilepsy, anxiety disorders, Parkinson's Disease, and nicotine withdrawal, among many other areas of unmet medical need.
Pfizer will also have over 400 projects in its discovery pipeline and is building the largest distinct library of chemical compounds in the industry. This worldwide organization is now poised to sustain Pfizer's future growth well into the next decade.
"Our industry is entering a period of momentous change and opportunity, an era when the sequencing of the human genome combined with new technologies holds great promises for developing new medicines," said Peter B. Corr, senior vice president of science and technology. "The integration of Pharmacia will enhance our ability to turn scientific advances into products that both extend lives and also improve the quality of life for patients worldwide. Only a small percentage of compounds ever become a new medicine and our goal is to improve that percentage through the targeted applications of new technologies, both in discovery and early clinical development, as well as utilizing disciplined resource allocation."
Dr. Corr said Pfizer is using a variety of new tools to better predict the success of early-stage clinical compounds. These tools include biomarkers and imaging approaches in humans that permit clinicians to evaluate much earlier if a new investigational medicine is producing the expected response prior to proceeding with larger, more expensive clinical trials.
Substantial Financial Strength, Significant Cost Savings, Increased Operational Flexibility
"As we move to rapidly integrate Pharmacia into our operations, we will be in a position to capture the revenue and expense synergies between the two companies, focus our assets and efforts intensively on our core businesses, and continue to fund long-term R&D at a rate that will sustain our leadership far into the future," said David Shedlarz, executive vice president and chief financial officer. Pfizer expects to achieve merger-related cost savings of $2.5 billion in 2005. In addition, Pfizer recently completed the sale of three non-core businesses, Tetra, Adams and Schick, for a total of approximately $5.4 billion in cash.
"Importantly, the combined company will be much less dependent on any individual product, therapeutic category or market, which will substantially increase operating flexibility. We will continue to have a solid financial position: our strong operating cash flow and well-managed balance sheet have earned Pfizer triple-A credit ratings from both Standard & Poors and Moody's. Only seven industrial companies in the world have such ratings, and Pfizer has had them for 17 years. The combined company has the people, products, pipeline, scale and financial flexibility to extend, and sustain, our leadership."
Since the announcement of the acquisition in July 2002, hundreds of colleagues from Pfizer and Pharmacia have worked intensively to develop an outstanding new organization. "Consolidating two global companies with great histories will not be easy, nor will it be painless, and it will affect colleagues and facilities from both organizations. Throughout the integration period, we're committed to communicating quickly, clearly and openly to colleagues and shareholders alike. Longer term, we will be in an even better position to grow, which will benefit all our stakeholders," Shedlarz said.
Expanding Patient Access
A global challenge to improving public health is expanding access to medicines, particularly for low-income patients and those in need in the developing world. "Pfizer is committed to addressing this challenge with the same level of ingenuity and focus that we bring to discovering and developing medicines," McKinnell said. "The only way to be successful is to partner with governments, non-governmental organizations and other companies to seek innovative solutions. That is why, for example, we strongly support a Medicare prescription drug benefit in the United States. That is also why we are working with the state of Florida to demonstrate that the integrated management of health care for those most in need results in better medical outcomes and overall cost reductions in healthcare."
In 2002, Pfizer patient-access programs served 1.5 million people in the United States, and Pfizer donated more than $520 million in medicines to assist low-income, uninsured patients worldwide. Through all of its philanthropic efforts, Pfizer and the Pfizer Foundation donate more than $2 million in cash and medicines every working day to provide medicine, medical care and community service to people who need help.
Pfizer's patient-access programs will be expanded to include the medications that have been marketed by Pharmacia. In the interim, Pfizer will continue to operate Pharmacia's patient-access programs without change. (For more specific information, see the separate Patient Access" statement.)
Dr. McKinnell concluded, "I commend the cooperation and professionalism of everyone at both Pfizer and Pharmacia who have worked very hard over the past 10 months. Our transition planning has gone smoothly, with a continued focus on maintaining business performance. Today we are prepared to move forward as a unified organization. By doing so, I am confident that we are making a major advance in our commitment to do more good, for more people, than any other company on the planet."
ファイザー製薬 筑波工場の機能縮小 ファルマシアと統合で
ファイザー製薬株式会社（本社：東京都新宿区 代表取締役社長：アラン・Ｂ・ブーツ 資本金：１９８億円）は、創業５０周年を迎える８月１日をもってファルマシア株式会社を統合します。
ファルマシア（株） １，１３１億３，０００万円 （２００２年度）
December 21, 2003 Pfizer
Pfizer to Acquire Esperion Therapeutics to Extend Its Research Commitment in Cardiovascular Disease
Pfizer Inc today announced it has
entered into an agreement to acquire Esperion Therapeutics,
Inc., a biopharmaceutical
company focused on the development of high density lipoprotein
(HDL) targeted therapies for the treatment of cardiovascular
Pursuant to this agreement, Pfizer will commence a cash tender offer to acquire the shares of Esperion stock for $1.3 billion at a price of $35 per share, subject to certain conditions. This price represents a 54 percent premium over Esperion's average closing share price during the last 20 trading days.
Esperion Therapeutics brings a novel approach to the emerging area of HDL Therapy and reverse lipid transport for the acute treatment of cardiovascular disease. Recently, Esperion published positive Phase II results on a biopharmaceutical compound (ETC-216) that showed a statistically significant reduction in plaque volume in patients with acute coronary syndrome at the end of six weeks. Esperion also has a second biopharmaceutical compound, ETC-588, in Phase II and a number of early-stage compounds.
"By acquiring Esperion, we can bring our research capabilities to bear on an emerging new area which has potentially significant beneficial impact on patients", said Hank McKinnell, chairman and chief executive officer of Pfizer. "Epidemiologic data and drug intervention trials both support a strong correlation between higher HDL levels and improvements in morbidity and mortality."
"The acquisition will enable us to utilize Pfizer's skills and apply the resources necessary to develop our pipeline of compounds to benefit patients with atherosclerosis", said Roger Newton, president and chief executive officer of Esperion. "We are pleased to have the opportunity to work with the world leader in cardiovascular medicines to develop HDL-focused therapies."
The Pfizer product Lipitor is the world's most prescribed agent for reducing low density lipoprotein (LDL). Pfizer is also developing Lipitor/torcetrapib, which works by combining Lipitor with an agent that inhibits the action of cholesteryl ester transfer protein or CETP. Results of Phase II studies indicate that this combination may represent a significant advance in preventive cardiovascular medicine by enhancing the LDL-lowering effect of Lipitor while also increasing HDL or "good" cholesterol.
While both Lipitor and Lipitor/torcetrapib are chronic therapies, Esperion has three clinical compounds that are being developed as acute, hospital-based treatments to regress arterial plaque and thereby reduce morbidity and mortality in patients who have had a cardiovascular event.
Atherosclerosis, which is a leading cause of death from heart attack and stroke, occurs when there is a build-up of cholesterol-rich fatty areas called plaques in the arteries. The break-up and dispersal of these plaques can block the blood flow throughout the body, which can be fatal. It is estimated that atherosclerosis accounts for more than 75 percent of all deaths from cardiovascular disease.
"Pfizer is clearly committed to long-term cardiovascular research", said Dr. McKinnell. "We recognize that HDL control is an emerging area, and that early-stage development brings risk. However, we are confident that the rigorous and long-term clinical trials we plan to conduct will further scientific and medical understanding in this area, which will ultimately benefit patients."
Based in Ann Arbor, MI, Esperion was founded by a group of scientists who worked on the discovery and development of Lipitor. Esperion will operate as a division of the Pfizer Global Research and Development organization, and remain in Ann Arbor.
Lazard and Cadwalader, Wickersham & Taft advised Pfizer in the transaction. Lehman Brothers and Morgan, Lewis & Bockius advised Esperion. Esperion is listed on the Nasdaq National Market under the symbol "ESPR."
Esperion Therapeutics, Inc http://www.esperion.com/
Esperion Therapeutics, Inc., is a biopharmaceutical company dedicated to the discovery, development and commercialization of a novel class of therapies to treat cardiovascular and metabolic diseases, including atherosclerosis, as they relate to high density lipoprotein cholesterol, “HDL-C”, also known as the “good” cholesterol.
The technology platform for Esperion is based upon the Reverse Lipid Transport (RLT) pathway. The RLT pathway is responsible for removing excess cholesterol and other lipids from arterial walls and other tissues for transport to the liver and elimination from the body. The Company's product candidates work by stimulating the RLT pathway through the enhancement of key HDL properties, which may result in improved vascular structure and function. Esperion is focusing its efforts on developing both acute and chronic therapies for cardiovascular and metabolic diseases.
Esperion was founded in 1998 by, among others, members of the Warner-Lambert/Parke-Davis (now Pfizer) team that discovered and developed atorvastatin, the highly successful multibillion-dollar drug. Since that time, an additional group of exceptional scientists and specialists has joined the Company. Many of these individuals have been instrumental in the discovery, development and commercialization of several of the pharmaceutical industry's most successful therapies. It is this combined team that makes Esperion a leading enterprise in HDL drug discovery and research.
Esperion already has four product candidates in the pipeline: three biopharmaceuticals including AIM (ETC-216), LUV (ETC-588), RLT Peptide (ETC-642) and one small molecule, ESP 31015. Each of these product candidates is designed to enhance the naturally occurring processes in the body that remove excess cholesterol and other lipids from arterial walls and other tissues. The biopharmaceutical product candidates could complement the current standard of care in patients with acute coronary syndromes. The small molecule product candidate is intended to be developed for the chronic treatment of patients with risk factors for atherosclerosis, including those who present with the metabolic syndrome, a condition that affects one out of five adult Americans.
Pfizer to Explore Strategic Alternatives for Consumer Healthcare Business
In response to media
inquiries ahead of the company's February 10 meeting with
financial analysts, Pfizer Inc said today it will be exploring
strategic alternatives for Pfizer Consumer Healthcare (PCH).
These alternatives include retaining, spinning off or selling the
The objective of the review is to unlock the value of the business for Pfizer shareholders at a time when market valuations are attractive for large, high-quality consumer businesses. PCH is a leading global consumer healthcare business with a portfolio of well-known, growing brands.
Pfizer said that the welfare of PCH colleagues and other Pfizer colleagues supporting the business will remain a high priority throughout the process, consistent with our long-standing values and respect for colleagues throughout the company.
At the February 10 meeting, Pfizer will provide a comprehensive overview of its business and financial strategy, including key products and its industry-leading pipeline, as well as further elaborate on this strategic initiative.
新会社は、当初３年間は、探索研究と前臨床開発研究を中心にプロジェクトを推進し、４〜５年目にはＰＯＣ（Ｐｒｏｏｆ Ｏｆ Ｃｏｎｃｅｐｔ：臨床効果の検証）までの臨床試験を実施できる組織へと事業の拡大を図ります。新会社は、今後も市場成長が見込まれる「疼痛」と「消化管疾患」の２つの治療領域に関する革新的な創薬研究をビジネスの中核とするとともに、米国ファイザー社との契約に基づいて取得した知的財産を駆使して、製薬企業向けのライセンス供与の展開を積極的に行っていきます。
社 名：ラクオリア創薬株式会社（RaQualia Pharma Inc.）
代表取締役社長＆ＣＥＯ：長久 厚（ながひさ あつし）
コーポレートスローガン：ｉｎｎｏｖａｔｏｒｓ ｆｏｒ ｌｉｆｅ
（２）ＩＯＣＮ（Integrated, Open Collaboration Network）ビジネスモデル
ファイザー中央研研究者 １１１億円集め新会社 新薬候補の開発を継承
Pfizer in Talks to Buy Wyeth in $60 Billion Deal
Pfizer Inc., seeking to replace revenue it will lose within three years to generic competition, is in talks to buy Wyeth, according to three people familiar with the discussions. Wyeth shares jumped the most in a decade.
A deal may be worth more than $60 billion, based on a 20 percent premium over Wyeth's share price yesterday. Pfizer, the world's biggest drugmaker, has been negotiating with Madison, New Jersey-based Wyeth for months, one person said. A combination would help Pfizer offset some of the $12 billion in sales it will start losing in 2011 when its top-selling Lipitor cholesterol pill gets generic competition.
With $25.5 billion in cash and short-term assets as of Sept. 30, New York-based Pfizer is one of the world's most cash-rich companies. It would gain Wyeth's Prevnar vaccine, recommended by the U.S. government as a childhood shot against pneumonia, and dependable sales not threatened by generics. The combined company would have annual sales of more than $70 billion, 55 percent more than the world's second-biggest drugmaker, GlaxoSmithKline Plc.
“Wyeth represents perhaps the best take-out play if one assumes there will be at least some big pharma consolidation over the next one to three years,” said Tim Anderson, an analyst at Sanford Bernstein & Co., in a note.
The deal could be completed as early as next week and may cost Pfizer as much as $70 billion, the Wall Street Journal reported, citing unidentified people.
Wyeth rose $4.91, or 12.7 percent, to $43.74 at 4:01 p.m. in New York Stock Exchange composite trading, the biggest gain since Jan. 20, 1998. Pfizer rose 24 cents, or 1.4 percent, to $17.45.
Ray Kerins, a spokesman for Pfizer, said the company won't comment on “market speculation.” Doug Petkus, a spokesman for Wyeth, didn't immediately return a call.
A combination of Pfizer and Wyeth could spark other deals as drugmakers face competition from generic medicines and pressure from health insurers to lower prices amid the recession. Merck & Co., Johnson & Johnson, Abbott Laboratories, Eli Lilly & Co. and Bristol-Myers Squibb Co. also are poised for possible big deals, analysts have said.
Drug companies, rich in cash from medicines people still need in a recession, have access to loans while other companies struggle for financing, said Deutsche Bank analyst Barbara Ryan in a Jan. 20 conference call with clients.
“There are very few companies in the world that are going to get money in this environment, but these companies are going to get it,” Ryan, who is based in Greenwich, Connecticut, said in the call. “When we have conversations in private with these CFOs, I am being told they have access to money.”
With Wyeth, Pfizer's earnings may fall as little as 10 percent rather than 23 percent when Lipitor loses patent protection in 2011, said Ryan in a note to clients today.
Pfizer's last two big acquisitions didn't pay off for investors, said Michael Obuchowski, chief investment officer at First Empire Asset Management Inc., of Hauppauge, New York, in an interview today. The $60.3 billion purchase of Pharmacia Corp. in April 2003 gained painkillers Celebrex and Bextra. Bextra was later pulled from the market and Celebrex sales fell 40 percent amid safety concerns. Pfizer also bought Warner-Lambert Co. for $116 billion in 2000, giving it Lipitor.
Buying Wyeth doesn't “make any sense for Pfizer,” Obuchowski said. “It's a company in restructuring acquiring a company in restructuring.”
Wyeth also has “plenty of lingering legal and patent expiration problems of its own,” said Carol Levenson, an analyst with Gimme Credit LLC in Chicago, in a note today to clients. “We don't see why Wyeth is a solution to Pfizer's problems.”
Pfizer may have to cut its dividend to finance the acquisition, said Leerink Swann analyst Seamus Fernandez in a note to clients today. The benefit to the share price from the deal would still be worth it for investors, he said.
In December, Pfizer froze its annual dividend after 41 years of increases. The company has said it will keep the dividend at 32 cents a share, payable March 3 to shareholders who owned the stock as of Feb. 6.
Pfizer Chief Executive Officer Jeffrey Kindler, 53, is reorganizing to accelerate drug development and plans to fire staff as the recession threatens to crimp sales.
A deal would be the biggest pharmaceutical acquisition in almost five years and may signal consolidation in the drug industry as drugmakers seek to recover losses they'll face in the next four years for branded medicines with $121 billion in annual sales.
Wyeth's market value was $51.7 billion at the close of New York Stock Exchange trading yesterday. With a 20 percent premium, Pfizer would have to pay about $62 billion.
Pressure on Kindler
Kindler has been under pressure from investors and analysts to make a major acquisition as Lipitor sales fade in advance of the patent expiration. Kindler's efforts to reorganize the company by firing more than 15,000 employees, including top management, haven't been enough, Samuel Isaly, managing partner at Orbimed Advisors LLC, said in an interview.
“Pfizer is desperate in my opinion -- or should be desperate,” Isaly said. “Jeff Kindler will be terminated if he doesn't do something soon, so he has really got to move it and we wouldn't be surprised to see a major move.”
Kindler has said he is evaluating all possible deals, large and small.
Evercore Partners Inc. and Morgan Stanley are advising Wyeth, said one of the people familiar with the talks. Pfizer's advisers include Merrill Lynch & Co., now part of Bank of America Corp., another person said.
Wyeth has been in talks to buy Crucell NV, a Dutch developer of biotechnology medicines against AIDS, rabies and Ebola, in a deal that would create one of the world's biggest vaccine makers, Crucell said Jan. 7. That deal could be worth $1.35 billion, according to a person familiar with talks.
A Pfizer deal with Wyeth “doesn't have to stop the takeover” of Crucell “because Wyeth has enough cash,” said Tom Muller, an analyst at Theodoor Gilissen in Amsterdam, in an interview today.
Sanofi-Aventis SA, Glaxo and Novartis AG are also expanding vaccine sales to protect them against eroding sales from patent expirations. Sanofi, the biggest supplier of flu shots, bought smallpox vaccine-maker Acambis Plc for 260 million pounds ($353 million) last year.
Prevnar, Wyeth's vaccine against pneumonia, is the company's second-biggest drug with $2.4 billion in 2007 sales. Wyeth plans to seek U.S. approval this year for a new version of Prevnar that would cover six additional strains of pneumonia, continuing its dominance over competitors. It's also developing the Alzheimer's disease treatment bapineuzumab with Elan Corp. of Ireland.
“Its comparative lack of a patent cliff could help smooth earnings for those companies that are not as fortunate,” said Sanford Bernstein's Anderson of Wyeth.
Crucell NV fell 1.65 euros, or 9.6 percent, to 15.50 euros in Amsterdam trading.
Large pharmaceutical acquisitions would contrast with the strategy of London-based Glaxo, the world's second-biggest drugmaker.
“Every bank in the world comes in with their book of what deal is like a no-brainer for a new CEO to do,” Chief Executive Officer Andrew Witty said in a Jan. 8 interview. “I'm not quite so convinced that there are such great, no-brainer mega- transactions to get done.”
That might change if a competitor pursues a large acquisition, he said.
‘Pull the Trigger'
“If one big company makes a move, I can absolutely imagine that triggering off a series of moves,” Witty said. “The industry has historically habitually demonstrated its inability to sit on its hands when someone moves. The question is whether somebody big is going to finally pull the trigger.”
Abbott Chief Executive Officer Miles White said he's looking to buy companies beaten down by the recession.
“It's a good time to be a buyer,” White said in a conference call with investors on Jan. 21. “A lot of values are depressed -- for good reasons in many cases and for not-good reasons in others. My priority is non-pharma, but I'm not going to pass up an attractive pharmaceutical deal if I see one.”
TO ACQUIRE WYETH, CREATING THE WORLD'S PREMIER BIOPHARMACEUTICAL
Diversification, Flexibility and Scale Position New Company for Success in Dynamic Global Health Care Environment
Establishes Leadership in Human, Animal, and Consumer Health, including Primary and Specialty Care; in Vaccines, Biologics and Small Molecules; and Across Developed and Emerging Markets
Unique and Flexible Business Model Features Focus and Agility of Smaller Enterprises Backed by Resources and Scale of Global Company
Combination Strengthens Platform for Improved, Consistent, and Stable Earnings Growth and Sustainable Shareholder Value
New Company Will Promote Health and Wellness and Respond More Effectively to Unmet Needs of Patients, Physicians, and Customers Around the World
Pfizer and Wyeth today announced that they have entered into a definitive merger agreement under which Pfizer will acquire Wyeth in a cash-and-stock transaction currently valued at $50.19 per share, or a total of approximately $68 billion. The Boards of Directors of both companies have approved the combination.
The combined company will create one of the most diversified companies in the global health care industry. Operating through patient-centric businesses that match the speed and agility of small, focused enterprises with the benefits of a global organization's scale and resources, the company will respond more quickly and effectively to meet changing health care needs. The combined company will have product offerings in numerous growing therapeutic areas, a strong product pipeline, leading scientific and manufacturing capabilities, and a premier global footprint in health care.
With its broad and diversified global product portfolio and reduced dependence on small molecules, the new company will be positioned for improved, consistent, and stable top-line and EPS growth and sustainable shareholder value in the short and long term. It is expected that no drug will account for more than 10 percent of the combined company's revenue in 2012.
Under the terms of the transaction, each outstanding share of Wyeth common stock will be converted into the right to receive $33 in cash and 0.985 of a share of Pfizer common stock, subject to the terms of the merger agreement. Based on the closing price of Pfizer stock as of January 23, 2009, the stock component is valued at $17.19 per share. The transaction provides immediate value to Wyeth shareholders through the cash component, as well as continued participation in the future prospects expected to result from the combination through their ownership of approximately 16 percent of Pfizer's shares.
The deal is expected to be accretive to Pfizer's adjusted diluted earnings per share in the second full year after closing(1). The transaction is anticipated to yield cost savings of approximately $4 billion to be fully realized by the third year after closing. Savings are expected in selling, informational and administrative functions, research and development, and manufacturing.
The transaction will be financed through a combination of cash, debt and stock. A consortium of banks has provided commitments for a total of $22.5 billion in debt.
In connection with the proposed transaction between Pfizer and Wyeth, the Board of Directors of Pfizer has determined that, effective with the dividend to be paid in the second quarter of 2009, it will reduce Pfizer's quarterly dividend per share to $0.16, which continues to be competitive with other industry participants. Pfizer believes the transaction offers significant opportunities to enhance long-term shareholder value.
Jeffrey B. Kindler, Chairman and Chief Executive Officer of Pfizer, said: "The combination of Pfizer and Wyeth provides a powerful opportunity to transform our industry. It will produce the world's premier biopharmaceutical company whose distinct blend of diversification, flexibility, and scale positions it for success in a dynamic global health care environment. The new company will be an industry leader in human, animal and consumer health. With our combined biopharmaceuticals business, it will lead in primary and specialty care as well as in small and large molecules. Its geographic presence in most of the world's developed and developing countries will be unrivaled."
Bernard Poussot, Chairman, President and Chief Executive Officer of Wyeth, said, "Wyeth's commitment to scientific innovation has enabled us to build a diversified biopharmaceutical company with leadership in attractive growth areas such as vaccines, nutritionals and biologics. For example, Wyeth developed Prevnar, the first pneumococcal vaccine for infants. In addition, because we were early to see the potential of biotechnology to create life-changing medicines, we now have a strong franchise which includes Enbrel, the number one biotechnology product in the world. With our business focused on prevention and wellness, Wyeth is well positioned in today's rapidly changing health care environment. Our employees should be enormously proud of what we have built and confident that combining with Pfizer will accelerate our pursuit of innovative new medicines to meet critical unmet patient needs. Wyeth and Pfizer are highly complementary businesses, and together we can build the best diversified health care company in the world. We believe we can better execute our strategy and can accomplish far more together in the years ahead than either company could have achieved on its own."
Mr. Kindler continued, "With this combination, Pfizer will offer patients around the world a uniquely broad and diversified portfolio of biopharmaceutical innovations through business units--each one focused on different customer needs and backed by the resources of a premier global organization. By combining the spirit of small, agile enterprises with our combined scale, Pfizer will advance its mission of working together toward a healthier world."
Over the last two years, Pfizer has become a leaner, more disciplined, and far stronger company that is now capable of - and has demonstrated - superior and consistent execution of its strategies and commitments. As separately announced today, for example, Pfizer achieved its 2008 objectives despite the challenging economy, including meeting or exceeding its financial guidance and cost-reduction target.
With this essential
foundation established, the combination with Wyeth meaningfully
advances in a single transaction each of the strategic priorities
that Pfizer has identified and pursued over the last two years,
Mr. Kindler added, "Over the last several years, Wyeth's leadership and its employees have done an outstanding job creating a strong, diversified biopharmaceutical company. The people, products, and technologies that Wyeth brings to the new company will enhance our scientific capabilities and drive further commercial innovation to improve the health of the patients we serve. The compelling combination of Pfizer and Wyeth allows us to advance our newly strengthened organization to the next level by harnessing the talents of the best people from both companies. This will enable us to accelerate significantly our progress along 'Our Path Forward' as we pursue our mission of applying innovative science to improve world health."
Leadership and Business Diversification
The combination of Pfizer and Wyeth will create the world's premier biopharmaceutical company with a broad range of therapeutic solutions for many health challenges and preventive care.
For Patients Today - A
Broad Portfolio of Health Care Solutions and Treatments
The combined company will offer customers and patients a broad range of products for every stage of life--with top tier portfolios in key therapeutic areas such as cardiovascular, oncology, women's health, central nervous system, and infectious disease and a diverse product portfolio that includes 17 products with more than $1 billion each in annual revenue. Pfizer will be the second largest specialty care provider, with products including the world's leading biologic, Enbrel; Prevnar, the world's largest-selling vaccine; Sutent for cancer; Geodon for schizophrenia; and Zyvox for infection. The transaction also builds upon Pfizer's position as a global leader in animal health, with strong product lines in attractive segments, for companion animals, biologics and anti-infectives.
For Patients Tomorrow - A
Diverse Range of Technology and Research Platforms
The new company will have more resources to invest in research and development than any other biopharmaceutical company and access to all leading scientific technology platforms, including vaccines, small and large molecules, nutritionals and consumer products.
The combination also brings together a robust pipeline of biopharmaceutical research and development projects, including programs in diabetes, inflammation/immunology, oncology and pain, as well as significant opportunities in Wyeth's Alzheimer's disease pipeline, which has a number of compounds in development, including phase three biotech compound Bapineuzumab. These will be added to the exciting agents currently in early and later stage development at Pfizer for Alzheimer's disease, illustrating the breadth and depth the new company will be able to use in targeting the diseases that most affect patients.
The new company will have an enhanced ability to innovate, operating as focused business units tailored to patients and other customers. Each business unit will oversee product development from clinical trials to commercialization. This approach will allow for rapid decision-making and a more efficient use of resources and, as a result, will enhance the company's ability to invest in long-term opportunities. The combination will also provide additional high quality and high volume manufacturing capabilities, including Wyeth's Grange Castle, Ireland facility, the largest integrated biotechnology manufacturing facility in the world.
For Patients Everywhere -
A Strong Global Presence
Geographically, the combination will enhance Pfizer's and Wyeth's compelling portfolios in important growth areas. Based on IMS data, the combined company will be number one in terms of biopharmaceutical revenues in the United States with an approximately 12% market share; in Europe with an approximately 10% share; in Asia (ex-Japan) with an approximately 7% share; in Japan with a 6% share; and in Latin America with a 6% share.
Pfizer and Wyeth's combined presence will be significant in high-growth emerging markets, such as Latin America, the Middle East and China, where Wyeth has an impressive presence in infant nutritionals and Pfizer is a recognized leader in pharmaceuticals. This enhanced geographic position will further strengthen the combined company's business, provide increased exposure to high-growth, less-developed and under-penetrated markets, and provide compelling opportunities for expense savings.
The proposed transaction is subject to customary closing conditions, including approval by the stockholders of Wyeth, notification and clearance under certain antitrust statutes. In addition, the proposed transaction is subject to Pfizer's financing sources not declining to provide the financing due to a material adverse change with respect to Pfizer or Pfizer failing to maintain credit ratings of A2/A long-term stable/stable and A1/P1 short term affirmed. There are no other financing conditions to closing in the merger agreement. Pfizer and Wyeth expect the transaction to close at the end of the third quarter or during the fourth quarter 2009.
Pfizer's lead financial advisors are Bank of America Merrill Lynch, Goldman Sachs and J.P. Morgan. Barclays and Citigroup are acting as financial advisors. Its legal advisor is Cadwalader, Wickersham & Taft LLP. Wyeth's financial advisors are Morgan Stanley and Evercore Partners and its legal advisor is Simpson Thacher & Bartlett LLP. In addition, Wachtell, Lipton, Rosen & Katz served as counsel to Wyeth's Board of Directors.
January 29, 2009 AP
Pfizer acquisition agreement would give Wyeth seats on Pfizer board, $4.5 billion breakup fee
Drug giant Pfizer Inc.'s agreement
to acquire rival Wyeth would give Wyeth directors a voice on
Pfizer's board and includes hefty penalties aimed at preventing
the deal from collapsing, according to a regulatory filing made
The 86-page agreement states that Pfizer will add two current directors on Wyeth's board to its own board.
And it spells out what happens if either side tries to back out of what would be Pfizer's third large acquisition since 2000.
Pfizer would be on the hook for $4.5 billion, while Wyeth would have to pay a breakup fee of $1.5 billion to $2 billion, depending on the timing and circumstances under which its terminates the deal. The higher fee for Wyeth would apply after 30 days from when the agreement was reached on Jan. 25, or Feb. 24.
York-based Pfizer announced Monday that it had an agreement to
acquire Wyeth, of Madison, N.J. for just under $68 billion,
although the value of the deal has since declined with Pfizer's
share price, to about $64.8 billion.
The regulatory filing by Pfizer, called a Current Report, was submitted to the U.S. Securities and Exchange Commission late Thursday.
Among other things, it states that Wyeth cannot actively solicit a competing proposal from another potential acquirer.
Approval of Wyeth's shareholders is one of several conditions for the merger to be consummated, along with approval of federal regulators and Pfizer securing its planned financing of the deal.
The acquisition is fueled by Pfizer's need to address an expected revenue crash in 2011 when the world's top-selling drug, its cholesterol fighter Lipitor, loses patent protection. By buying Wyeth, Pfizer expects to mutate from a maker of blockbuster pills, including Lipitor, impotence pill Viagra and antidepressant Zoloft, to a one-stop shop for vaccines, biotech drugs, traditional pills, nonprescription products and veterinary medicines.
Besides that diversification, the deal offers Pfizer the chance to immediately boost revenue by about 50 percent, to about $71 billion a year, and at the same time slash costs furiously to improve its bottom line.
Pfizer is beginning to lay off roughly 8,200 of its employees and said that ultimately 15 percent of the combined companies's workforce of 129,500 people - nearly 20,000 workers - will lose their jobs.
Under the agreement, Pfizer would fund the purchase with about one-third each worth of its own cash, stock and newly issued debt. Wyeth shareholders would receive a combination of $33 in cash for each of their shares, plus 0.985 of a share of Pfizer stock. Given that the value of Pfizer stock has fallen from its close at $17.45 a share last Friday, to $15.12 Thursday, the total value of the deal is now down to about $64.8 billion.
In order to fund the $22.5 billion cash portion of the purchase, Pfizer had to slash its dividend from 32 cents to 16 cents, a move analysts say was a major reason investors sold off furiously Monday, driving the share price down from $17.45 to $15.65. The dividend had been a prime reason for hanging onto Pfizer's languishing stock, now worth about one-third of its $48 peak in 2000.
Pfizer will significantly increase its debt with the deal, borrowing a total of $22.5 billion from five investment banks that are then syndicating, or parceling out, parts of that debt to other banks, lenders and investors.
"When we close the transaction, we'll have about $50 billion of debt," including existing Pfizer and Wyeth debt, Chief Financial Officer Frank D'Amelio told institutional investors at a luncheon Tuesday were Pfizer executives talked up the deal.
To prevent the need to borrow even more, D'Amelio told the investors, Pfizer will be repatriating a large, but unspecified amount of its cash held overseas. That comes at the price of much higher tax rates, high enough that Pfizer estimates its 2009 tax rate will be 30 percent, up from 22 percent in 2008.