Mylan, Pfizer merger could create generic drug giant
If the merger of Pfizer’s off- patent drugs division with Mylan comes to fruition, it would create a new giant in the business of drugs without patent protections, according to those briefed on the matter.
The proposed deal could be announced as early as Monday.
Pfizer’s off- patent division includes best- selling treatments like Viagra. Mylan is the maker of the Epi Pen emergency allergy treatment.
The generic- drug industry has suffered for years in the face of falling prices, a trend that is often overlooked as many Americans struggle with paying for brand- name drugs.
Prices have declined for a range of reasons, in part because fewer blockbuster drugs — like the one- time Pfizer bestsellers like Lipitor and Viagra — are losing their patent protection. ( Prices fall more slowly immediately after patents expire, then drop precipitously after that.) Pharmacies and wholesalers have also been banding together to create giant buying groups, creating more leverage against generic drug companies.
As a result, generic drugmakers like Teva and Mylan have struggled, leading some companies to shed their generics units or others to consolidate. Last fall, Novartis sold parts of its Sandoz generics unit to Aurobindo Pharma.
Under the terms of the potential all- stock transaction, Pfizer would spin off the offpatent unit and then merge it with Mylan to form a new publicly traded company, these people said. Mylan shareholders would own about 40% of the combined business. Pfizer would also receive about $ 12 billion in cash from the sale of new debt by the merged business.
Pfizer has focused on drugs that are expected to maintain patent protections for some time, both those it has developed on its own and those it has acquired through takeovers. Last month, for instance, it agreed to buy Array BioPharma, a maker of specialized cancer treatments, for about $ 10.6 billion.
That has also meant parting ways with lowermargin businesses. Last year, Pfizer agreed to combine its consumer health care unit, which includes products like Advil and Centrum multivitamins, with GlaxoSmithKline’s.
Pfizer’s off- patent division, known as Upjohn, reported about $ 3 billion in revenue in the first quarter this year. Mylan, which had a market value of $ 9.5 billion as of Friday, reported $ 2.5 billion in sales during the same period.
Although Mylan is primarily a generic- drug company, it gained notoriety in 2016 in the uproar over the skyrocketing price of the EpiPen. Mylan CEO Heather Bresch was the target of much of the outrage but kept her job, even as vilified executives from other drug companies that rapidly raised prices — including Martin Shkreli of Turing Pharmaceuticals and J. Michael Pearson of Valeant, now known as Bausch Health — were forced to depart.
But under the terms of the potential deal, Ms. Bresch would step down. The current head of the Pfizer off- patent unit, Michael Goettler, would take over as chief executive. Mylan’s current chairman, Robert Coury, would become executive chairman.