Mylan will be combined with Pfizer’s off-patent branded and generic established medicines business Upjohn, creating a global pharmaceutical company to be named at a later date.
Through this agreement, Mylan, which produces the blockbuster EpiPen, will bring its global portfolio with treatments for therapeutic areas such as central nervous system disorders, and infectious and cardiovascular disease.
Upjohn holds no longer patent-protected drugs like Lipitor (atorvastatin calcium), Celebrex (celecoxib), and Viagra (sildenafil), which will give the new company already established commercial products.
Pfizer separated its business into three units: Innovative Medicines, Established Medicines, and Consumer Healthcare in 2019. This move was expected to support a predicted higher and sustained revenue growth profile.
Upjohn reported a drop in sales during its first quarter in 2019 and Mylan’s stock lost 60% of its value over the past three years when both companies lost exclusive rights to manufacture big-name drugs like Viagra and EpiPen.
According to Mylan and Pfizer, the transaction will enable the new company to expand the geographic reach of Mylan’s product portfolio and future pipeline into markets where Upjohn is already established.
“We are creating a new champion for global health – one poised to bring world-class medicines to patients across a wide range of therapeutic areas,” Albert Bourla, CEO of Pfizer commented on the transaction.
The newly established company will create a differentiated portfolio of prescription medicines, complex generics, and over-the-counter products. It will also use Mylan’s existing manufacturing infrastructure and supply chain capabilities to reach global markets.
“The combined organization will have a presence across nearly every continent and major market, establishing a new leadership position in Asia, and offering products capable of treating all major therapeutic areas,” said Robert Coury, Mylan chairman and soon to be CEO of the newly formed company.
He added, “This combination also further accelerates Mylan’s longstanding strategy to create the operational scale and commercial capabilities necessary to provide the world’s more than 7 billion people with access to medicine.”
Transaction sees new leadership and financial gains
Upon closing, the company will be renamed and rebranded. It will be led by Mylan’s current chairman, Coury, who will serve as executive chairman. Michael Goettler, current group president of Upjohn will take on the role of CEO, and Rajiv Malik, current Mylan president will serve as president.
The board of directors at the unnamed company will include eight members designated by Mylan, and three members designated by Pfizer.
According to the agreement, the company will be incorporated in the US and will operate globally in Pennsylvania, China, and India.
With this agreement, the remaining Pfizer business expects to generate revenues reaching approximately $40bn (€35.9bn), in 2020 after the transaction is expected to close, and the new company is expected to have revenues of $20bn in 2020.
The terms of the agreement see Pfizer shareholders owning 57% of the combined new company and Mylan shareholders 43%. Upjohn will issue $12bn of debt prior to the separation from Pfizer, with the parent company retaining its gross debts.
The new company is expected to have $24.5bn of total outstanding debt at closing.