- Generic drugmaker Mylan is combining with Pfizer’s Upjohn unit, which makes off-patent drugs like Viagra, according to a Monday announcement.
- Execs from the companies sought to paint the new drugmaker as something greater than the sum of its parts.
- It will be "entirely different, a pharma company with a truly unique profile that does not correspond to any of the pharma industry peers," Michael Goettler, who will serve as the new company’s CEO, said on a Monday morning conference call.
- Wall Street analysts expressed skepticism that the new company will be valued more by investors than Mylan, which has seen shares drop by more than 40% over the last 12 months.
- Mylan shares popped nearly 13% in Monday trade after the news. Watch Mylan trade live.
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The beleaguered generic drugmaker Mylan and Pfizer’s Upjohn unit, which makes off-patent drugs, will combine into a new company, as part of an all-stock deal that was announced on Monday.
For Mylan, whose shares have dropped more than 40% over the last 12 months, the deal marks a bid to rejuvenate the company by expanding and installing a changed leadership team. After the announcement, Mylan shares popped nearly 13% in Monday trading, giving the company a market value of $9.7 billion. Pfizer shares fell 2%.
Executives from Mylan and Pfizer painted the new company as something greater than the sum of its parts on a conference call held on Monday to explain the deal to investors and analysts. The Mylan-Upjohn combination will be renamed, though the new name has not been announced.
Mylan is best known for making the EpiPen allergy shot. Upjohn’s drugs include the erectile-dysfunction pill Viagra and the cholesterol-lowering drug Lipitor.
Michael Goettler will be the CEO of the new company. He’s a pharma industry veteran who serves as group president of Pfizer’s Upjohn business.
Goettler called the new company "something entirely different, a pharma company with a truly unique profile that does not correspond to any of the pharma industry peers," on the Monday call.
One slide from the new company’s 29-page investor presentation speaks to Mylan and Pfizer’s argument here. The idea is that the new company, with a projected $19 billion to $20 billion in 2020 revenues, will have a scale that’s bigger than generic drugmakers like Teva or Perrigo and can rival smaller Big Pharma companies like Amgen and Eli Lilly.
Mylan/ Pfizer
The combination of the two companies will expand on Mylan’s catalog of drugs for the central nervous system, anesthesia, infectious disease and heart disease with Upjohn’s brands like Viagra, Lipitor and Lyrica.
The executives also said the new company will bring a sharper focus on rewarding shareholders. The new company plans to pay a dividend equal to 25% of its free cash flow, while maintaining an investment-grade credit rating.
Under the all-stock deal, Pfizer shareholders would own 57% of the new company and Mylan investors would own 43%. The transaction is expected to close around the middle of next year. The deal was first reported by The Wall Street Journal.
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Source: Business Insider – feedback@businessinsider.com (Clarrie Feinstein)