Mylan's Merger with Pfizer's Off-Patent Drug Unit Will Create 'New Champion for Global Health'


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This morning, Pfizer announced that its off-patent medicines company, Upjohn, will merge with generic drugmaker Mylan to form a new pharmaceutical company with projected 2020 revenues of up to $20 billion.

The potential merger of the companies has been teased for the past several days but is now a reality. The new company will have numerous well-known brands in its portfolio, including the Epi-Pen, Viagra, Lipitor, Celebrex and others. The structure of the deal is known as an all-stock, Reverse Morris Trust transaction. Upjohn will be spun off to Pfizer shareholders and then combined with Mylan. Each share of Mylan’s stock will be converted into one share of the new company. Pfizer shareholders would own 57% of the combined new company and Mylan shareholders will own 43%, the companies said this morning. As could be expected, shares of Mylan are soaring in pre-market trading. The stock was up more than 20% before the opening bell. That’s a needed boost for the company, which has seen a significant dip in its share prices over the past several years due to pricing controversies over its Epi-Pen.

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Pfizer and Mylan have not yet announced a name for the new company. They said it will be “renamed and rebranded” when the deal is officially closed. However, a leadership structure is already in place. Mylan’s current Chairman of the Board Robert J. Coury will serve as executive chairman of the new company and Upjohn’s current president, Michael Goettler, will serve as chief executive officer. Rajiv Malik, the current president of Mylan, will serve as president of the new company. Two noted Mylan executives will not be part of the new company. Current Mylan CEO Heather Bresch will retire upon the close of the transaction, and Ken Parks, chief financial officer of Mylan, will depart the company. The company will be based in the United States with facilities located in Pittsburgh, Shanghai and Hyderabad, India. The combined Upjohn and Mylan are expected to drive a “sustainable, diverse and differentiated portfolio of prescription medicines, complex generics, over-the-counter products and biosimilars” It will be supported by an established infrastructure and supply chain, as well as a strong management team.

Pfizer CEO Albert Bourla said the new company will be a “new champion for global health” with therapies for a wide range of therapeutic areas. The new company, Bourla said, will allow Pfizer to maintain the “financial flexibility” to continue to advance its pipeline and provide strong returns to shareholders.

“By bringing Mylan’s growth assets to Upjohn’s growth markets, we will create a financially strong company with true global reach. I’m also excited about the management team, which combines strong executive talent from both companies, whose commitment to improving global health for patients and to delivering returns to shareholders are great assets for the new company,” Bourla said in a statement.

For Pfizer, the decision to form the new company with Mylan comes as the pharma giant is undergoing its own restructuring. Last year, the company announced its intentions to reorganize itself into three different business units, including an innovative medicines business and established medicines business. Following that announcement, Pfizer and GlaxoSmithKline teamed up to create a global consumer healthcare company. Pfizer and GSK combined their consumer healthcare businesses.

For the past 18 months, Mylan’s Coury said he has been listening to shareholders who have expressed concern about the company. Today’s announcement with Pfizer, is a response to those concerns, he said and “represents a transformative move for Mylan.” Not only will the company have many trusted brand-name drugs, but it will also have an immediate global presence.

Goettler said he is excited to be leading the new company and delivering on the shared commitment of delivering transformative medicines, as well as shareholder return.

Out of the gate, the new company is expected to have pro forma 2020 revenues of $19 to $20 billion. But, the company will be saddled with some debt as well. Pfizer and Mylan said the new company will have approximately $24.5 billion of total debt outstanding at closing.

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