Pfizer, the world's largest drugs group, is in talks with its US rival Wyeth about a takeover that, if finalised, would be one of the biggest merger deals ever seen in the pharmaceutical sector.
The two companies are reported to have been in talks for several months about a deal, which could be worth as much as $60bn (£44bn) and is likely to be funded in cash and shares. Spokesmen for Pfizer and Wyeth refused to confirm that discussions had taken place, saying they "do not comment on marketplace rumours". Analysts think Pfizer is under pressure to counter the falling future revenues when its leading treatments lose patents, and consequently sales, as generic competitors enter the market.
"Pfizer, more than anyone else in the pharmaceutical industry, is under pressure because of [cholesterol treatment] Lipitor coming off patent," said Chris Sterling, European head of chemicals and pharmaceuticals at KPMG.
Some industry experts warned, however, that buying Wyeth would do little to solve the problem in the long term: "This would not be a good fit," said Jeremy Batstone-Carr, head of research at Charles Stanley. "It is a step back into the dark ages. Most are looking to the emerging markets for growth, whereas this deal, if it is true, will put Pfizer back into the position it is in now in another 10 years. My suspicion is that they are fishing for ideas, and if I can say anything to persuade them not to do this deal, I will."
The UK's largest drugs company, GlaxoSmithKline, which is also concerned about its drugs coming off patent in the next few years, announced yesterday that it has agreed to buy the marketed product portfolio of Belgium's UCB in Africa, the Middle East, Asia Pacific and Latin America for £466m. GSK's chief executive, Andrew Witty, has stated that he believes an increasing proportion of future revenue will come from emerging markets and consumer healthcare sectors, and he is keen to buy into these, rather than spend heavily trying to find the next blockbuster drug.
A deal between Pfizer and Wyeth appears some way off, however. A stumbling block could be the $60bn price tag, which could come under pressure from volatile equity markets.
Mick Cooper, an analyst at Blue Oar, said the deal is unlikely to lead to a new round of consolidation in the industry. "Pfizer is in a unique position in facing the edge of the cliff in respect of Lipitor. Buying Wyeth will give it access to the increasingly important vaccines market. There have been a lot of rumours about the group lining up a bid for [US biotechnology firm] Amgen, which personally, I think would be a better fit."Reuse content