Pfizer's Acquisition of Wyeth
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Case Code: BSTR342 Case Length: 19 Pages Period: 2008-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Pfizer, Wyeth Industry: Pharmaceuticals Countries: US Themes: Mergers and Acquisitions |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Deal
On January 26, 2009, Pfizer announced that it had entered into a definitive agreement to acquire Wyeth in exchange of US$ 68 billion in stock and cash. On the occasion, Jeffery Kindler (Kindler), Chairman and CEO 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."...
The Synergies
Pfizer's management was optimistic about the expected synergies as a result of the Wyeth deal (Refer to Table II for Pfizer's Expected Synergies from Merger with Wyeth). Wyeth had ventured into biotech very early - in the early 1990s - compared to its big rival pharma companies. The traditional drugs developed using chemicals contained small molecules and were easy for generic drug manufacturers to replicate once the patents for those drugs expired...
The Challenges
Industry experts pointed out that Wyeth had lost patents for many of its blockbuster drugs by the time Pfizer announced the merger deal. The patent of its top drug by sales, Effexor, which had brought sales of US$ 3.8 billion in 2008, would expire in 2010 (Refer to Table IV for sales of Wyeth's top selling drugs in 2008). Most of Wyeth's blockbuster drugs were also to go off patent by 2012. Moreover, the company also had pipeline problems as it had no ready to market drugs in the pipeline...
Exhibits
Exhibit I (A): Income Statement of Pfizer (2003-08)
Exhibit I (B): Balance Sheet of Pfizer (2003-08)
Exhibit I (C): Valuation Ratios of Pfizer (2003-08)
Exhibit II (A): Income Statement of Wyeth (2003-08)
Exhibit II (B): Balance Sheet of Wyeth (2003-08)
Exhibit II (C): Valuation Ratios of Wyeth (2003-08)
Exhibit III: Pfizer's Stock Price Chart (January 1982 - May 2009)
Exhibit IV: Wyeth's Stock Price Chart (January 1982 - May 2009)
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