Pfizer in talks to acquire Wyeth for $60 billion

23 January 2009

In among the top M&A deals ever, Pfizer Inc is reported negotiating to acquire rival drug maker Wyeth in a blockbuster deal potentially worth more than $60 billion that could alter the global drug industry, The Wall Street Journal reported today.

The last pharmaceutical deal worth more than that was when Pfizer bought Pharmacia Corp. for $60.3 billion in April 2003. Merck & Co., GlaxoSmithKline Plc and Abbott Laboratories also have said they're interested in deals as prescription sales wither from generic competition.

At more than $60 billion, Wyeth's price tag would dwarf Eli Lilly & Co.'s largest buyout last year of biotech cancer drug maker ImClone Systems. Like Pfizer, Lilly is looking at a major patent expiration in the coming years, as its antipsychotic drug Zyprexa will be vulnerable to generic competition in 2013. (See: Eli Lilly to acquire ImClone for $6.5 billion)

News of the possible deal sent Wyeth shares up 13 per cent in pre-market trading Friday, while shares of Pfizer slipped about 2.7 per cent.

Pfizer would likely use a combination of cash and stock for the acquisition, according to the report. While Pfizer shares have fallen nearly 5 per cent in the past three month, those of Wyeth have risen over 15 per cent. With its shares closing at $38.83 yesterday, Wyeth has a market capitalisation of roughly $51.7 billion.

A combination of these two US pharmaceutical giants would redraw the boundaries of the global drug industry, which has suffered from flagging product development and high fixed costs in recent years.