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Home / Business / Pfizer enters into agreement to merge the patent-free drug business with Mylan

Pfizer enters into agreement to merge the patent-free drug business with Mylan



Pfizer
Inc.


PFE 0.98%

is in talks to merge the drug-free drug business with generic drug maker Mylan NV Worldwide seller of cheaper drugs.

The unfinished deal could already be announced on Monday, if an agreement is reached. The companies have discussed stock trading, with Mylan shareholders owning just over 40% of the new company and Pfizer shareholders the rest, one respondent said. Pfizer would also receive about $ 12 billion in proceeds from a new sale of debt, said the person.

Mylan's market value is currently close to $ 1

0 billion.

The deal would merge two companies whose sales have slowed since then Large sellers lost patent protection and faced lower-cost competition. For Pfizer this includes lipitor cholesterol pills and the drug Viagra against impotence in men. Companies believe that the combination with Mylan, which is known for the epiPen allergy shot, is a way to revive sales growth.

Michael Goettler, who directs Pfizer's patent-free medicines business, would become the chief executive of the combined company if the deal came to fruition, and Mylan chairman Robert Coury as executive chairman, said one respondent.

Current Mylan CEO Heather Bresch would go, the person said. The combined company would be based in the US.

The spin-off of the off-patent business would further advance Pfizer CEO Albert Bourla's efforts to focus on patented prescription drugs and vaccines. Pfizer is at a later stage in the development of a range of new products, each of which, if approved, could exceed $ 1 billion in annual sales, accelerating growth.

The deal could trigger further changes in the generics industry, which are shaken by competition Indian manufacturers and US price-driven corporations are buying and distributing the drugs and getting bigger and bigger.

Pressure has impacted sales – and stocks – of Mylan and other leading generics companies, notably Teva Pharmaceutical Industries Ltd. Mylan shares fell by about 75% from their peak in early 2015. Industry representatives have speculated that consolidation would be a way out by enabling companies to cut costs and focus on faster-growing products like copies of biotech drugs and build weight to confront the big buyers.

Last year of India

Aurobindo Pharma
Ltd.

agreed to buy parts from

Novartis

The generic business worth up to $ 1 billion.

Both Pfizer and Mylan, based in the Netherlands but based in Pittsburgh, had been looking for ways to slow down their business. In May, Mr Bourla had approached the idea of ​​a combination with Mr Coury, one of the persons who were familiar with the business.

Previously, Pfizer investigated the spin-off of its drug-free drug business called Upjohn and which it is, based in Shanghai and listed on the Hong Kong Stock Exchange. Upjohn's revenue decreased $ 45 million to less than $ 3.1 billion in the first quarter compared to the same period last year.

Upjohn's products, which in addition to Lipitor and Viagra also include the painkiller Lyrica, were once known and generated billions of dollars in annual sales for Pfizer.

However, sales have been declining since generic competitors hit the market, and are weighing on the company that wants to increase its growth by launching new branded and cancer and heart vaccines diseases and other disorders.

In order to focus on fast-growing branded medicines, Pfizer has shut down animal health and other non-core businesses as they are new innovative therapies.

Currently, the New York-based company is combining the company's consumer health business with the company

GlaxoSmithKline


GSK 0.89%

PLCs in a joint venture that will eventually be spun off. Last month, it was agreed to buy cancer medicines

Array BioPharma
Inc.

for 10.6 billion dollars.

Mylan's executive board has meanwhile conducted a strategic review as the company seeks to revive sales by transitioning to more complex and expensive generic drugs and copies of biotech drugs.

Mylan's management promotes the company's pipeline with new products. However, Wall Street has cooled the company in recent years largely due to competition for its best-selling product, the EpiPen. Mylan has been criticized by patients, doctors and lawmakers for raising the price by almost 550% between 2007 and 2016.

Mylan generated $ 2.5 billion in revenue in the first quarter, down 7% from a year ago.

The drug company's generic portfolio was impacted by general price pressures. Mylan is burdened with approximately $ 14 billion in debt, most of which comes from dealings with other drug companies, including the Swedish Meda.

The company also belongs to several generic companies that are being investigated by prosecutors and prosecutors to make possible collusion prices for some medications. Mylan said it knows no signs of misconduct.

Pfizer and Mylan are already working together. Pfizer manufactures EpiPen injectors for Mylan. And the two companies are producing generic drugs in Japan and selling them.

Write to Jonathan D. Rockoff at [email protected] and Cara Lombardo at [email protected]

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