Pfizer has confirmed it has entered into an agreement to buy Wyeth in a deal worth $68bn, which it hopes will strengthen its position in anticipation of a challenging few years.
The news broke on Friday when insiders told the Wall Street Journal that talks have been underway for months but that a deal was not imminent.
However, the tone had changed by last night when the New York Times reported that Pfizer’s board had agreed to the $68bn deal and that financing was in place.
It has been widely reported that Pfizer has been looking to complete a deal of this magnitude to help it through the run of patent expirations that will occur in the coming years.
The deal with Wyeth would also strengthen Pfizer’s position in the increasingly lucrative vaccine market and broaden its portfolio into new therapeutic areas.
Financial markets have welcomed the deal, with Wyeth’s share price jumping by 12.7 per cent and, unusually for a company making the acquisition, Pfizer’s also rose by 1.4 per cent.
However, there are concerns among analysts that the deal will distract Pfizer from making moves for fledgling biotechs that are needed to strengthen its pipeline in the long term.
The Wyeth deal seems more suited to stopping Pfizer’s revenues falling over the next few years when some of its blockbusters, including Lipitor, come off patent. In addition Pfizer should be able to generate cost-savings through consolidating overlapping operations.
The deal will be biggest pharmaceutical takeover in the past five years and create a company with revenues of about $75bn.
Pfizer’s move halts Crucell talks
Wyeth has withdrawn from discussions to take over Dutch vaccine-maker Crucell in a move that suggests its board is focused on the deal with Pfizer.
Crucell’s share price fell by 23 per cent when it released a statement saying that Wyeth had withdrawn from discussions.