- The Washington Times - Tuesday, January 27, 2009


No. 1 drugmaker Pfizer Inc. said Monday it is buying No. 12 Wyeth for $68 billion in a deal that ultimately will wipe out nearly 20,000 jobs but quickly boost Pfizer’s revenue and profit and transform it overnight into a medicine cabinet for all.

New York-based Pfizer managed with one stroke to overshadow a full house of problems, some of which would have pummeled its stock: a 90 percent drop in income, a hefty charge for settling government charges of wrongdoing, a severe cut in its dividend, a shockingly low profit forecast for 2009, and 8,000 job cuts starting immediately.

That’s all on top of the colossal problem triggering this deal: the expected loss of $13 billion a year in revenue for cholesterol fighter Lipitor starting in November 2011, when it gets generic competition.

By buying Wyeth, Pfizer will mutate from a maker of blockbuster pills to a one-stop shop for vaccines, biotech drugs, traditional pills and nonprescription products for both people and animals.

Pfizer said it would cut about 8,000 jobs, 10 percent of its work force, as part of what it expects will be a staff reduction totaling 15 percent of the combined companies’ workers - implying a total job loss of almost 20,000.

The cash-and-stock deal, one of the industry’s biggest, is expected to close late in the third quarter or in the fourth quarter. It comes as Pfizer’s 2007 fourth-quarter profit takes a brutal hit from a $2.3 billion legal settlement over allegations it marketed pain reliever Bextra and possibly other products for indications that had not been approved.

“In one single transaction, the combination with Wyeth advances every single one of [our] strategies,” Pfizer Chief Executive Officer Jeff Kindler told reporters during a news conference.

Those goals include increasing sales in emerging markets, enhancing the ability to treat specific diseases, such as Alzheimer’s, and becoming a top player in vaccines and biologic drugs, which are made from living cells.

Pfizer, the maker of impotence pill Viagra and Detrol for overactive bladder, said it will pay $50.19 per share for Madison, N.J.-based Wyeth, a 14.7 percent premium to the company’s closing price of $43.74 Friday.

In Monday trading, Pfizer shares closed down $1.80, or 10.3 percent, at $15.65. Wyeth shares closed down 35 cents at $43.39.

From the first quarter through 2011, Pfizer will cut 10 percent of its current work force of 81,900. Pfizer also is halving its prized dividend to 16 cents per share and eliminating five of its 46 manufacturing sites. Those closures and reducing its facilities’ square footage by about 15 percent will cost about $6 billion before taxes, of which $1.5 billion has been incurred, Pfizer said.

The company, long under pressure from big investors to make a bold move, said it expects eventually to cut the companies’ combined work force, now 129,000 people, by 15 percent. That includes the Pfizer cuts announced Monday, which will affect most departments from administration and sales to manufacturing and research.

“It will be done in a methodical way,” Pfizer spokesman Ray Kerins said. “We will continue to look at the staffing needs of the company and make decisions based on those needs.”

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