Pfizer, the largest drugmaker in the world, is planning to divest their off-patent drug business and to combine it with Mylan, a generic-drug maker. The agreement is structured as an all-stock deal, meaning that every share of Mylan will be converted into a share of the new company.
The shareholders of Pfizer will own 57% and their counterparts would own 43% of the new company. This newly-combined company, which will sell Pfizer’s Viagra and Mylan’s EpiPen, will be based in the U.S. The deal itself will be a so-called reverse Morris trust –Pfizer’s Upjohn business will first be divested and then combined with those of the acquiring company.
It estimated that the combined company will have annual sales in the excess of $20 billion. Shares of Mylan rose 20% and are now $22.10, while shares of Pfizer lowered by 2% to $42.34. The total 2018 revenue for Pfizer alone was $53.6 billion.
The new company is set to be led by Michael Goettler, who is currently the president of the Upjohn business. Robert Coury, chairman and CEO Heather Bresch of Mylan will be an executive chairman and will be departing from the company respectively.
Jared Holz, a health-care strategist at Jefferies, is positive about this merger since Mylan had “one of the most out-of-favor management teams in all of healthcare.”
Heather Bresch was a central figure in the 2016 scandal over Mylan’s pricing of their EpiPen – an important medication for people with allergies. The price of EpiPens had risen from $100 in 2008, to $600, with Bresch defending this extreme price hike. The company later made a generic version which was sold for approximately $300.