King Pharmaceuticals has approved an offer from Pfizer to merge. This will put the number of pharma mergers this year to an unprecedented number. The second merger in two years for Pfizer, this is also the second-most-expensive deal. All told, King Pharmaceuticals will definitely cost Pfizer about $ 3.6 billion. When a patent expires, a drug business can lose lots of cash. Numerous of these mergers are intended to fight this effect. Resource for this article – King Pharmaceuticals to be bought out by Pharma giant Pfizer by Personal Money Store.
Get King Pharmaceuticals for a large premium
When Pfizer declared that it would be purchasing King Pharmaceuticals, the price declared had been 40 % over King’s current stock price. In Monday trading, the price of King jumped to almost match the offer price. Pfizer saw the value that King Pharmaceuticals has. King manufactures pain medication mostly. There’s a pretty big portfolio for King Pharmaceuticals drugs. Pfizer’s manufacturing and marketing divisions can get to see it all.
Broadening the Pfizer portfolio
The medication that King Pharmaceuticals makes is pain medication for the most part. King has been long developing “abuse-resistant” pain medication meant to replace drugs such as OxyContin. King Pharmaceuticals also sells vet drugs. Also, the EpiPen comes from the company. King Pharmaceuticals also has a contract with the Department of Defense to provide pre-filled syringes of anti-nerve agent medications. Pfizer and King will merge operations which will merge all contracts.
Figuring out difficulties with patent between Pfizer and King
This isn’t the very first time a merger and buyout has took place like this. Buyouts have made Pfizer a much larger business. It’s the largest drug maker in the world in fact. Pfzier, as well as King Pharmaceuticals, faces a serious income trouble in what the industry refers to as the “patent cliff.”. Most drugs, when they first are approved and reach market, are protected by patents. However, when that patent expires, less costly generics of the drugs are manufactured. Pfizer’s best-selling drug, Lipitor, faces a 60 percent drop in the several-hundred million dollar a year sales when it falls off the patent cliff. Hopefully, the income loss could be made up. This is why King Pharmaceuticals was bought off and is obtaining a change in portfolio.
Articles cited
Associated Press
google.com/hostednews/ap/article/ALeqM5hbaoWbl-qz6f2UkSXhOhVLnVHFrwD9IQB2C01?docId=D9IQB2C01
NY Times
dealbook.blogs.nytimes.com/2010/10/12/pfizer-to-buy-king-pharmaceuticals-for-3-6-billion/
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