Pfizer and Mylan, two of the most iconic drug manufacturers in the industry, are forming a new business that is aimed at becoming a global drug powerhouse in the low-priced drug market.
Pfizer announced earlier this week that it will be offloading its portfolio of drugs that are no longer under patent to combine it with Mylan's own business to establish a new entity.
The drugs under Pfizer's Upjohn portfolio include popular medications such as Lipitor, Celebrex, and Viagra. Other off-patent drugs in the portfolio include anxiety medication Xanax and anti-depressant drug Zoloft.
As part of the deal, Pfizer will be holding majority control over the new company. Pfizer shareholders will have a 57 percent ownership of the new entity, while Mylan shareholders will hold 43 percent. The company will reportedly be established under a new brand, a name that has yet to be announced.
Negotiations for the merged business were reportedly conducted over the week, with both parties now in agreement over the details. Analysts predict that the new combined company, which will be based in the United States, could have possible annual revenues of up to $20 billion.
The combined company will be headed by executives from both Upjohn and Mylan. Acting as its CEO will be Upjohn's current president, Michael Goettler.
The new company's executive chairman will be Mylan's current chairman, Robert Coury. Mylan announced that its current CEO, Heather Bresch, will be stepping down from her position once the deal is finalized.
Following the announcement of the merged company, Mylan's share priced skyrockets to more than 15 percent in early trading. Meanwhile, Pfizer's stocks fell down by almost 3 percent.
The loss of patent protection for Pfizer's popular drugs was a big blow to the company, leading to massive losses across the board. Pfizer's erectile dysfunction drug Viagra alone brought in an estimated $1.4 billion in annual sales for the company.
Pfizer has so far been trying to expand its portfolio of products as evident in its recent plan to acquire Array BioPharma for $11 billion. Array BioPharma is a relatively small operation that is developing highly profitable cancer treatments.
Mylan has had some success with its products in the past years, but the company faced public outrage over the pricing of its allergy treatment drug EpiPen.
Shortly after being approved by the US Food and Drug Administration (FDA), Mylan reportedly jacked up the price of its product by more than 400 percent. This had lead to a public scandal that negatively affected the company reputation. The company's stocks have so far lost more than 60 percent of its value in the last three years.
