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Pfizer, the country's largest drugmaker, is creating a hybrid new drug company by combining its off-patent branded drug business with the generic pharmaceutical company Mylan.
Pfizer's Upjohn, which sells one-time blockbusters like Viagra and Lipitor that have lost patent protection, will be spun off and then it will combine with Mylan, a $10 billion company.
The complex deal, expected to close in the middle of next year, will create a company with estimated 2020 revenue in excess of $19 billion, with sales in more than 165 countries. The name for the new company has yet to be determined.
The two companies have worked together for years. Pfizer manufactures Mylan's EpiPen, an auto-injector used to halt life-threatening allergic reactions. Mylan was heavily criticized, and its CEO Heather Bresch was brought before Congress two years ago, to answer questions about the price of the EpiPen, which had jumped five-fold to $600 for two EpiPens. They have been in short supply for more than a year because of quality problems and upgrades at a Pfizer factory.
Upjohn, the name of one of the companies Pfizer gobbled up during a spate of acquisitions in the 1990s and 2000s, sells off-patent and generic drugs that include the stars that drove Pfizer's growth: pain killers Celebrex and Lyrica, Norvasc for high blood pressure, Effexor for severe heartburn, Xanax for anxiety and Zoloft for depression.
Those products and others had been part of Pfizer's "essential health" business, but were peeled off in January to create Upjohn as a precursor to the combination plan.
"We believe that this transaction checks all the boxes," said Pfizer CEO Dr. Albert Bourla. The executive, who took over in January, said in an interview that Pfizer's huge sales force in China will be able to boost sales there of products made by Mylan, which has a limited presence in that huge market.
The strengthening ties between Pfizer and Mylan come at a precarious time for big drugmakers, who face enormous pressure to cut high prices for brand-name drugs.