Published: Tue, July 30, 2019
Health Care | By Cedric Leonard

Mylan to combine with Pfizer's off-patent medicines unit

Mylan to combine with Pfizer's off-patent medicines unit

"The new company, which combines the unique assets of Mylan with the iconic brands of Pfizer's Upjohn business, will not only accelerate our mission to serve the world's changing health needs, but also further unlock the true value of our platform while delivering attractive returns to shareholders for many years to come", said Robert Coury, Mylan chairman.

Among Pfizer's steps since January are the just-completed acquisition of biotech company Therachon Holding AG, to gain an experimental drug that could be the first treatment for a type of dwarfism called achondroplasia; the pending $11.4 billion acquisition of Array BioPharma Inc., which sells two melanoma drugs and is developing additional medicines for cancer and other conditions with limited treatments; and the August 1 start of a joint venture combining Pfizer's consumer health products with those of British drugmaker GlaxoSmithKline Plc. The new publicly traded company would have sales of about $19 billion to $20 billion in 2020, the drugmakers said in a statement. The deal would let Pfizer focus its considerable muscle on making new medicines, while Mylan would get a financial lifeline after a rocky stretch.

The deal will provide answers to questions both companies have faced. But in recent years it has been slimming itself into a sleek maker of innovative therapies for cancer and other diseases.

For the past year, Mylan has been struggling to address an ongoing EpiPen shortage that could potentially worsen as thousands of school children with allergies need to restock EpiPen supplies ahead of the school year.

Under the terms of the deal, which is to be structured as an all-stock, Reverse Morris Trust transaction, each Mylan share would be converted into one share of the new company. Still, that's well below the all-time peak of more than $67 reached in 2015. The new company will have about$24.5 billion of total debt outstanding at closing.

Mylan came under fire in 2016 after raising the price of a pair of EpiPens to $600, from $100 in 2008, enraging consumers and putting it in the center of the ongoing US debate over the high cost of prescription medicines. "This transaction checks every single box that they have discussed with me". The new Upjohn business posted revenue of $2.81 billion, down 11%.

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Pfizer's Upjohn, which sells one-time blockbusters like Viagra and Lipitor that have lost patent protection, will be spun off to combine with Mylan, a $10 billion company.

The new company, to be based in the United States and incorporated in DE, will be helmed by Pfizer's unit President Michael Goettler, who will become the chief executive officer. Upjohn Group President Michael Goettler will be the chief executive officer and Rajiv Malik, Mylan's president, will assume that same position.

"Following the layoffs, we will remain one of the largest employers in West Virginia with approximately 3,000 employees", Mylan officials said at the time. Pfizer will name three.

Pfizer's older drugs business has a much higher operating margin than Mylan's, Maris added. Second-quarter adjusted earnings were $1.03 a share, topping the 95 cents average of Wall Street's estimates compiled by Bloomberg.

Earlier, Mylan reported earnings that beat analyst estimates. But it also lowered guidance for the year.

Sales in the second quarter totaled $13.2 billion, a two per cent decline from a year prior. The drugmaker's off-patent business Upjohn saw sales fall 11% year over year, to $2.8 billion from $3.1 billion.

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