- The Washington Times - Saturday, January 24, 2009

NEW YORK | Pfizer Inc., the world’s largest drugmaker, may be seeking to buy rival Wyeth in a deal that could be valued at more than $60 billion, the biggest in recent memory.

The Wall Street Journal reported Friday that the companies have been in talks for months, although the story said a deal is not near completion and the state of the global markets could undo any plans.

Such a deal could cheer investors and analysts who have been pushing Pfizer - struggling with flat revenue, diminishing returns on research and looming generic competition to the world’s top-selling drug - to make a bold move to get out of its doldrums.

But acquiring Madison, N.J.-based Wyeth would transform Pfizer almost overnight from basically a pure pharmaceutical company into a broadly diversified health-care giant, given Wyeth’s huge presence and revenue in biotechnology drugs, vaccines such as the blockbuster pneumococcal vaccine Prevnar and consumer health products ranging from Advil to Robitussin.

“Such an acquisition makes strategic and financial sense,” Credit Suisse analyst Catherine Arnold wrote to investors, adding that the reported deal was not a surprise. “This deal would instantly make [Pfizer] a top-tier biologics player.”

Adding Wyeth would boost Pfizer’s revenue and cash flow in the short term, and its profits in both the short and long term, and “may also mark the beginning of a year of sector consolidation,” Ms. Arnold said.

Representatives for both Wyeth and New York-based Pfizer declined to comment.

Pfizer is the world’s top drugmaker by revenue, led by the blockbuster cholesterol drug Lipitor, which tallies about $13 billion in annual sales - about one-quarter of Pfizer’s entire revenue. Lipitor is expected to face generic competition in November 2011, and a high-profile effort to come up with a successor drug flamed out when torcetrapib had to be axed in late-stage testing because it triggered heart problems.

Last fall, Pfizer publicly conceded that failure when it narrowed its research areas and eliminated all new research on heart disease, the world’s top killer.

That’s left Pfizer Chief Executive Officer Jeff Kindler under pressure to take some kind of pre-emptive action, with investors upset that its share price is barely one-third of its July 2000 peak of $48.

Wyeth’s top seller, antidepressant Effexor, has faced generic competition since 2007. Heartburn drug Protonix got generic competition last year, when antibiotic Zosyn also lost patent protection, but that drug still has no generic competitors.

In any case, Wyeth’s fortunes don’t depend as heavily on any one drug, as Pfizer’s do on Lipitor. Pfizer’s massive “patent cliff” includes the expected loss of more than 70 percent of its 2007 revenue by 2015, noted Ms. Arnold, whose firm has done investment banking or other business with the two drugmakers.


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