Pfizer to absorb Mylan, creating generic giant

Pfizer, the country's largest drugmaker, will absorb the generic pharmaceutical company Mylan, potentially creating a global generic powerhouse.

The two companies said Monday that they'll combine Mylan, a USD 10 billion company, with Pfizer's Upjohn, which sells household names from Viagra to cholesterol fighter Lipitor that have lost patent protection.

The deal, expected to close in the middle of next year, will have estimated annual revenue in excess of USD 19 billion with sales in more than 165 countries. The name for the new company has yet to be determined.

The two companies have worked together closely for years. Pfizer manufactures Mylan's EpiPen, an auto-injector used to halt life-threatening allergic reactions. Mylan was heavily criticized, and its CEO Heather Bresch was brought before Congress two years ago, to answer questions about the price of the EpiPen, which had jumped five-fold to USD 600 for two doses.

EpiPens have been in short supply for more than a year because of quality problems and upgrades at a Pfizer factory.

Upjohn, the name of one of the companies Pfizer gobbled up during a spate of acquisitions in the 1990s and 2000s, sells off-patent and generic drugs that include the stars that drove Pfizer's growth: pain killers Celebrex and Lyrica, Norvasc for high blood pressure, Effexor for more heartburn and psychiatric drugs Xanax and Zoloft.

Shareholders of Pfizer Inc. will own 57 per cent of the combined new company and Mylan shareholders will own 43 per cent.

The deal Monday arrives at a precarious time for big drugmakers who are threatened by patent protection losses and lower-priced rivals.

The new company will be incorporated in Delaware and run operations in Pittsburgh, Shanghai and Hyderabad, India.

Upjohn is expected to be spun off or split off to Pfizer's shareholders and simultaneously combined with Mylan. Upjohn will issue USD 12 billion of debt at or prior to separation, with gross debt proceeds kept by Pfizer. The new company will have about USD 24.5 billion of total debt outstanding at closing.