Thelin is on the market in Europe, and Feb. 20's deal comes after Pfizer's patent on blood pressure drug Norvasc expired in 2007, as AP pointed out. Pfizer's had a steady several months of dealmaking.
The New York drug titan in January teamed up with Scil Technology GmbH in a $250 million licensing deal for the latter's osteoarthritis drug treatment. (On a tangent, Northwestern Unversity, where the Pfizer-manufactured pain management drug Lyrica was born, unveiled in December one of the largest drug royalty deals ever, a portion of its royalty interest in Lyrica to drug fund Royalty Pharma for $700 million cash.) Pfizer in November picked up Coley Pharmaceutical Group Inc. in a $164 million deal for access to a new type of immune system drugs. Such moves, The Deal's Alex Lash has noted, keep the drug pipeline flowing.
WHAT PFIZER WANTS
On the larger end, not too many months go by without Pfizer being mentioned, in passing or more seriously, as a prospective buyer of a peer. One analyst's report in August sparked Lash's assessment of the company's position:
Beset by cost cutting, layoffs and high-profile drug failures, what's a big pharma to do? How about spend $90 billion to take out a competitor?
That's what a Wall Street drug industry analyst recommends for Pfizer Inc., the troubled, top-heavy drug giant in the midst of a drastic restructuring from its executive suite to its far-flung labs and sales offices. In a report released Monday, Aug. 20, Credit Suisse Group analyst Catherine Arnold wrote that Wyeth Pharmaceuticals Inc. is ripe and Pfizer should do the plucking.
Arnold argued Pfizer should get on board because of Wyeth's biologics business, a highly lucrative area. Indeed, on the biotech front, Lash noted in May 2007: "Part of the buying frenzy is fueled by the peculiar state of drug giants such as Pfizer Inc., AstraZeneca plc and Merck & Co., all with plenty of cash and a desperate need for new products." But, Lash wrote:
Doesn't Pfizer have enough to worry about? That includes more than 10,000 layoffs the past two years, the imminent patent expiration of the $13 billion a year cholesterol drug Lipitor and the late-stage failure of its expected replacement, torcetrapib, and the drive to cut billions of dollars in spending. ...Pfizer does need to do something. Of the eight major U.S.-based drug companies, Credit Suisse estimates only Pfizer will have a negative growth rate through 2011.
Could Pfizer go after Bristol-Myers Squibb? Tara Croft examined the question in June 2007:
With drugs to treat heart disease such as Accupril and Norvasc and cholesterol drug Lipitor, New York-based Pfizer has a major cardiovascular franchise; it could be interested in Bristol for Plavix. But analysts think Plavix may not be enough, revenuewise, for Pfizer to make a move, especially with its pending patent expiration. [Citigroup Inc. analyst George] Grofik agrees. Pfizer, he says, is focused on implementing its $4 billion restructuring program -- "a venture that limits its appeal as an acquirer in the near-term."
In March 2007, Lash examined whether biotech biggie Amgen Inc. was primed for a buyout.
[Deutsche Bank Securities Inc. analyst Jennifer] Chao and other analysts say any prospective buyer would need $100 billion, a price tag beyond the means of all but the largest pharmaceuticals companies. "It could be attractive for a very large pharma [like] Pfizer [Inc.], but probably not too many others," says biotech analyst Eric Schmidt of Cowen and Co. LLC.
It was also thought Pfizer could bust in on Kos Pharmacueticals Inc.'s $3.7 billion deal with Abott Laboratories Inc. in December 2006 after Pfizer stopped human trials of its good cholesterol drug torcetrapib. Kos has its own HDL therapies. Analysts at the time also weighed in on other potential targets for Pfizer.
TEAMING UP
While the M&A questions keep popping up, the company may gravitate toward lower-risk moves and licensing deals rather than major buys. In May 2007, Croft noted:
Merck & Co. spent 10 years and more than half a billion dollars trying to prove that its Zocor cholesterol drug was better than Pfizer Inc.'s Lipitor. Unfortunately, the majority of cholesterol drug prescribers and takers weren't convinced. And neither, apparently, was Merck. The company announced in March that it is collaborating with Schering-Plough Corp. to develop a combination drug that uses Lipitor. ...
Rivals though they may be, Whitehouse Station, N.J.-based Merck and Kenilworth, N.J.-based Schering-Plough are teaming up to take advantage of Pfizer's misfortune. The two companies are collaborating on the development of a pill that combines Schering-Plough's Zetia cholesterol drug with the chemical compound that is Lipitor, or atorvastatin, and, although no formal marketing deal is yet in place, they said it will go on the market after Lipitor goes off patent in 2010.
The news came weeks after Pfizer and Bristol-Myers unveiled a $250 million deal to spread risk and team up in the development of the latter's anticoagulant apixaban, which is studied for the prevention and treatment of several venous and arterial thrombotic conditions. Such deals, Lash has predicted, are more likely for Pfizer going forward rather than any huge acquisitions. If the drug goes to market, Pfizer could pay out another $750 million.
Venture investing has also been part of its strategy.
COUGHING IT UP
In a major restructuring, Pfizer sold its consumer products division to Johnson & Johnson in 2006 for $16.6 billion. The FTC Dec. 12 granted the deal's approval, with divestitures. Pfizer could also move to sell off its animal health business. The deal was conditioned upon completing the sale of four units -- three Pfizer lines and one from J&J -- including Pfizer heartburn remedy Zantac to Germany's Boehringer Ingelheim GmbH for $509.5 million and Pfizer's Cortizone hydrocortisone anti-itch business and Unisom sleep aid business, as well as J&J's Balmex diaper rash treatment businessto Chattanooga, Tenn.-based Chattem Inc., announced as part of a $410 million deal in October.
J&J agreed in June to buy Pfizer's over-the-counter division, ending a long, hotly contested auction.
Earlier this year, New York-based Pfizer, the largest pharmaceutical company in the world, indicated a spinoff could create a standalone entity worth $10 billion in public markets, making it unlikely at the time that the unit would go for a sale price less than $12 billion to $14 billion, bankers told The Deal in early May.
- A spinoff would have been tax-free, but the company switched gears to an auction after suitors showed strong interest.
- Second-round bidders included Reckitt Benckiser plc, which makes Lysol and Woolite; Colgate-Palmolive Co.; and fellow pharmaceutical heavyweight GlaxoSmithKline plc, according to sources. At the time, others were thought to include Novartis AG, Procter & Gamble Co. and the recent victor, Johnson & Johnson.
SHOPPING SPREE
Pfizer itself had been on an acquisition run. The company in April 2006 agreed to pay Germany's Schwarz Pharma AG $210 million for the rights to an incontinence medicine. The same month, Pfizer said it would acquire South San Francisco, Calif.-based Rinat Neuroscience Corp., which develops drugs aimed at treating Alzheimer's disease and chronic pain, for an undisclosed amount (reportedly near $500 million).
Other notable then-recent Pfizer deals include:
- gaining FTC approval in October 2006 for its licensing deal for a portfolio of treatments for Alzheimer's disease and other conditions from Transtech Pharma Inc. with $155 million in upfront and near-term payments;
- another deal in October 2006 to acquire private British drugmaker PowderMed Ltd. and get into vaccines;
- taking Vicuron Pharmaceuticals Inc. and two late-stage antibiotic treatments in June 2005 for $1.9 billion;
- offering up $298 million for Idun Pharmaceuticals Inc.;
- paying up to $527 million for Angiosyn Inc., a preclinical research startup;
- a licensing deal with Incyte Corp. worth up to $800 million.
- Carolyn Murphy
| Dealwatch executive summary |
The Date |
The Action |
| 2.20.08 |
Pfizer picks up Encysive. |
| 1.16.08 |
Pfizer, Scil team up. |
| 12.2007 |
Northwestern sells some royalty rights. |
| 11.16.07 |
Pfizer deals for Coley Pharma. |
| 8.22.07 |
Should Pfizer go after Wyeth? |
| 6.08.07 |
Could Pfizer's deal for Bristol-Myers? |
| 5.11.07 |
Merck, Schering-Plough team up. |
| 4.26.07 |
Bristol-Myers, Pfizer team up. |
| 3.20.07 |
Is Amgen primed for a buyout? |
| 12.2006 |
Will Pfizer bid for Kos? |
| 11.2006 |
Pfizer may look to deals. |
| 10.13.06 |
Pfizer will sell Zantac. |
| 10.09.06 |
Pfizer gets into vaccines. |
| 6.26.06 |
Indeed, Pfizer unloads its consumer products division to Johnson & Johnson for $16.6 billion. |
| 5.30.06 |
As second-round bids come due for Pfizer's OTC unit, a sale looks like a greater possibility. |
| 5.17.06 |
A tax move could up the bidding price for the Pfizer unit. |
| 5.17.06 |
GlaxoSmithKlein expresses interest in boosting its OTC offerings, but won't say whether a Pfizer bid is in the works. |
| 5.12.06 |
Pfizer teams with Bethesda Partners LLC to back an $8 million, Series B round of funding for drug authentication technology provider SupplyScape Corp. |
| 4.17.06 |
Pfizer continues its acquisition binge, paying $210 million for the rights to an incontinence drug. |
| 2.09.06 |
Pfizer first publicly voices interest in a sale of the OTC unit. |
| 1.12.06 |
Pfizer inks deal with Sanofi-Aventis to pay $1.3 billion for the rights to insulin drug Exubera. (See related Deal memo.) |
| 12.27.05 |
Pfizer takes $50 million of Perlegen Sciences Inc. preferred stock. |
| 8.29.05 |
A $1.9 billion Pfizer-Vicuran deal looks like it will clear antitrust hurdles. |
| 1.20.05 |
Pfizer unveils plans to take Angiosyn Inc. for $527 million. |
| 2004 |
PPM Capital Ltd. and Frankfurt-based Triton Beteiligungsberatung GmbH pick up Phadia AB from Pfizer in a $575 milion deal. |
Source: The Deal |
Pfizer Inc. unveiled plans Feb. 20 for a $195 million deal for Encysive Pharmaceutical Inc. to bolster its offerings targeting high blood pressure. The target in July said it had tapped Morgan Stanley to weigh strategic options, the month after the FDA failed to approved Encysive's Thelin drug, which treats pulmonary arterial hypertension, for the third time. 
