November 11, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Since it was confirmed last week that Pfizer Inc. is in friendly talks to acquire Allergan , analysts have been speculating on what the company would look like and who would run it.
The speculation focuses on two primary points. One is the possibility that Allergan’s chief executive officer, Brent Saunders, might be groomed to run the merged company, or that the merged companies might split into two separate companies, with Saunders running one of them.
Inside sources tell BloombergBusiness that if the companies do merge, Saunders is likely to run the company. If it then splits, something Pfizer has indicated in the past it wouldn’t be able to do until 2017, Saunders would probably oversee the brand-name drug company. The other company, assuming a split, would run mature products at or near their patent expiration.
Allergan, best known for manufacturing Botox, is headquartered in Dublin, but is operated out of New Jersey. A Pfizer acquisition would allow it to shift its domicile to Ireland with its significantly lower corporate tax rate. Ireland has a 4.8 percent effective tax rate as of 2014. The U.S.’s effective tax rate is 25.5 percent, and Pfizer has been upfront about its desire for a tax-inversion deal.
Analysts and investors have been guessing when Pfizer would make another merger bid ever since its $119 billion bid for UK-based AstraZeneca PLC fell apart in May 2014. For some time the speculation focused on GlaxoSmithKline , but that was put to rest in early November.
Saunders, 45, has a recent history of big deals. A graduate from the University of Pittsburgh and the Fox School of Business in Philadelphia, he worked in the life science industry in various compliance positions before becoming the chief executive officer of Bausch & Lomb in 2010. In 2013, he sold Bausch & Lomb to Canadian firm Valeant Pharmaceuticals International Inc. for $8.7 billion.
He then led Forest Laboratories, Inc. , which was shortly afterward acquired by Actavis . Saunders then teamed up with then-chief executive Paul Bisaro. Saunders took on the role of chief executive and Bisaro stepped up to executive chairman, which is where they both remain today.
In June 2015, Allergan acquired Kythera Biopharmaceuticals, Inc. for about $2.1 billion. Kythera develops and markets treatments for double chins and male pattern baldness. In July, Allergan sold its generic drug business to Israel-based Teva Pharmaceutical Industries Ltd. for $40.5 billion.
If there is a deal, and it’s increasingly looking like there will be, insiders told Bloomberg it would likely be announced by Thanksgiving, Nov. 26.
The merged company would become the world’s largest pharmaceutical company, exceeding Johnson & Johnson ’s $300 billion in annual revenue. Of course, if it subsequently split into two, one for innovative patented medicines and the other that handles generics and older drugs, it wouldn’t be the world’s largest. “This would be the creation of two companies really, not one huge $350 billion Pfizer,” Andy Summers, co-portfolio manager at Janus Capital Group told Reuters last week.
