Will Pfizer buy out Wyeth?

Pfizer is reportedly in talks to buy out its rival Wyeth. The potential merger could be valued at $60 billion. Although no deal is imminent yet, negotiations have been going on for months and may be fuelled by the loss of the Lipitor patent in 2011.

The pharmaceutical giant Pfizer is in talks to acquire rival drug maker Wyeth in a deal that could be valued at $60 billion, according to a Wall Street Journal report. The two sides have been negotiating for months but given the economic uncertainty and recent market volatility, talks are fragile and could collapse. No deal is imminent yet, and both companies have refused to comment on "market rumours and speculations". Joining the two U.S. based companies would create a "behemoth" with a combined revenue of approximately $75 billion. The talks could have been fuelled from the loss of revenues expected when Pfizer loses the patent of its blockbuster cholesterol drug Lipitor in three years. New York-based Pfizer employs 83,400 people and has slashed 15,000 jobs since January 2007 and is preparing to cuts thousands more jobs in the coming months. Wyeth, based in New Jersey, counts 46,000 employees. Wyeth has a number of promising medicines including a strong franchise in vaccines, one area in which Pfizer has been weak. The merger could ultimately create a powerful large-scale developer of vaccines. Combining the major drug companies will not solve their short-term need for new drugs, but it will allow them to accumulatively slash research and development spending, which accounts for nearly 20% of sales at many companies. Pfizer Chief Executive Jeff Kindler has said,

“Business development — whether it is a small deal, a medium-sized deal or a large deal, is an enabler for strategies. It is not a strategy in and of itself.”