Wednesday, October 13, 2010

Pfizer to buy Bristol-based King Pharmaceuticals for $3.6 billion

Pharmaceuticals giant Pfizer is buying Tennessee's largest drugmaker for $3.6 billion in cash to add more pain products for its sales force and to beef up its drugs pipeline as patents expire on its key products.
Shares of King Pharmaceuticals Inc. of Bristol, Tenn., jumped 39 percent, or $3.99 per share, to close at $14.14 a share — the biggest percentage gain on the New York Stock Exchange in Tuesday's trading.

The deal, expected to close by next spring, would allow Pfizer to expand its pain products beyond arthritis treatment Celebrex and nerve pain remedy Lyrica.

King, whose products include the pain patch Flector and morphine pill Embeda, has been trying to move aggressively into abuse-resistant pain relief drugs, a strategy that's part of a restructuring slowed by a complex drug approval process nationally.

King has received approval for one drug in that category from the U.S. Food and Drug Administration, Embeda. Proponents say it could be an alternative to the often-abused OxyContin pain pills.

"These products fit pretty well and they're going to be able to eliminate some duplications in infrastructure between King and Pfizer," said Robert Hazlett, an analyst with BMO Capital Markets in New York. Hazlett follows King's and Pfizer's stocks.

A.J. Kazimi, chief executive officer of Nashville-based drugmaker Cumberland Pharmaceuticals, sees Pfizer's acquisition of King as a signal that Tennessee's bio-pharmaceutical industry is making strides on the national scene.

Pfizer expects at least $200 million in cost savings, mostly by eliminating overlap or duplication between the two sales forces. It's unclear what impact the deal would have on the 2,600 employees that King has including in Bristol and in New Jersey, where its top executives are based.

To most industry analysts, the Pfizer-King deal illustrates continuing consolidation in the pharmaceuticals business.

New products wanted

Pfizer is searching for new products as its top-selling cholesterol drug, Lipitor, is expected to lose some of last year's $5.4 billion in U.S. revenues to new generic competition next year when a patent expires. Last year, Lipitor generated $11 billion of sales worldwide for Pfizer.

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