Pfizer nears deal to combine off-patent drug unit with Mylan2 min read . Updated: 29 Jul 2019, 12:05 AM IST
- Michael Goettler, who runs Pfizer’s off-patent drug unit, would become chief executive of the combined firm
- Mylan, whose shares have fallen almost 50% in the past year, has a market value of $9.5 billion
Bengaluru: Pfizer Inc. plans to combine its off-patent business, which includes Lipitor cholesterol pills and male-impotence drug Viagra, with Mylan NV and form a generic drug giant, according to people familiar with the matter.
The deal, if completed, could be announced as early as Monday, said the people, who asked not to be identified because the negotiations are private. Under the potential stock deal, Mylan investors would get a little more than 40% of the new entity and Pfizer investors the rest.
Mylan executives held a meeting in New York last week to discuss the accord, and no one else is in the frame for the business, one of the people said. Mylan, whose shares have fallen almost 50% in the past year, has a market value of $9.5 billion. Pfizer, up 12% in the same period, is worth $240 billion.
Michael Goettler, who runs Pfizer’s off-patent drug unit, would become chief executive of the combined company, and Mylan chairman Robert Coury would be executive chairman, one of the people said. Current Mylan CEO Heather Bresch would depart. Mylan president Rajiv Malik, who faces civil suits accusing him of taking part in an alleged price-fixing scheme, would ultimately leave the combined company, one of the people said.
The business would be based in the US, removing the Dutch governance structure that has frustrated some Mylan investors and is essentially a takeover defence. Also part of the potential deal: the new company will refinance debt held by Mylan and the subsidiary of Pfizer. Mylan has more than $13 billion in long-term debt.
Officials for Pfizer and Mylan declined to comment. The story was originally reported by the Wall Street Journal.
The generic-drug industry has been under increasing pressure in recent years as competition drives prices lower and lower. In some cases, companies have been able to charge no more than the cost of production for certain medications.
That has also resulted in problems for consumers as some drugmakers elect to abandon medications that are no longer profitable, leading to shortages and other imbalances in the marketplace.
At the same time, giant pharmaceutical companies including Pfizer have been focusing more on developing innovative treatments for cancer and rare diseases. Pfizer has said that it’s trying to increase the pace of its own drug development and has been looking for ways to replenish its pipeline of potential blockbusters. In recent years, it has spun off the animal-health business and agreed to merge the consumer health arm into a new venture with GlaxoSmithKline Plc.