BackPfizer to acquire Hospira for about $17 billion
The firm will pay $90 per share in cash, which is a 39% premium to Hospira's Wednesday closing price of $64.80
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Pfizer Inc. agreed to buy Hospira Inc., the biggest provider of injectable drugs, in a transaction valued at about $17 billion, adding an array of medicines and boosting its efforts to develop copies of biological drugs.
Pfizer will pay $90 a share in cash, the New York-based drug maker said on Thursday in a statement, a 39% premium to Lake Forest, Illinois-based Hospira’s closing price 4 February.
Pfizer has been looking to make an acquisition after a failed $120 billion bid for AstraZeneca Plc last year in what would have been the industry’s biggest-ever acquisition. Buying Hospira will add a broad range of generic sterile injectable medicines to Pfizer’s portfolio and assist the company’s strategy to offer more biosimilar drugs.
“It’s all about fattening up the established pharma business," said Sam Fazeli, an analyst at Bloomberg Intelligence in London. “This way they can get the established products into a much larger organization and potentially spin that off."
Hospira and South Korean partner Celltrion Inc. developed a biosimilar copy of Johnson and Johnson’s Remicade, a $7-billion arthritis therapy, that was approved by European regulators in June 2013. Remicade is losing patent protection in several European markets this year.
Pfizer has been seeking its next blockbuster after a series of patent expirations. The company’s sales have been falling from a $67.1 billion peak in 2010, the year after the drug maker acquired Wyeth in a transaction valued at more than $60 billion.
Pfizer “will benefit from a significantly enhanced product portfolio in growing markets," Ian Read, the company’s chairman and chief executive officer, said in the statement.
The global market for generic sterile injectables is expected to reach $70 billion in 2020, Pfizer said, while the market for biosimilars may be $20 billion by that time.
The transaction will be financed two-thirds in cash, and one-third from new debt, Pfizer said. It should deliver $800 million in annual cost savings by 2018, according to the company.
The purchase will immediately add to Pfizer’s earnings, with a gain of 10 cents to 12 cents predicted in the first full year after completion, Pfizer said. The deal is expected to close in the second half of the year.
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