Drug maker Pfizer Inc. (PFE) Monday announce plans to spin-off its off-patent business and combine it with Mylan NV and form a generic drug giant.
Pfizer’s off-patent business Upjohn makes Lipitor cholesterol pills and male impotence drug Viagra, while Pittsburgh, Pennsylvania-based Mylan is popular for its EpiPen, an injector used to prevent life-threatening allergic reactions.
Under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, each Mylan share would be converted into one share of the new company. Pfizer shareholders would own 57% of the combined new company, and Mylan shareholders would own 43%.
The new company will be led by Mylan’s current Chairman Robert Coury, who will serve as Executive Chairman, while Michael Goettler, current Group President of Upjohn, will serve as Chief Executive Officer.
“I’m honored by the opportunity to lead this new company, which will deliver more medicines to more patients across the globe. I’m also excited to combine two talented and deeply experienced teams that share a passion for providing patients with access to medicines,” Goettler said.
The spin-off of Upjohn is part of a years-long effort by Pfizer to split into three parts – innovative medicines, lower margin generic drugs business and consumer healthcare. Pfizer and GlaxoSmithKline Plc in December had announced that they would combine their consumer health businesses. The latest move leaves Pfizer with more profitable innovative drugs, including cancer drug Ibrance and pneumonia vaccine Prevnar.
The new company is expected to have pro forma 2020 revenues of $19 to $20 billion. Pro forma 2020 adjusted EBITDA is anticipated to be in the range of $7.5 to $8.0 billion, including phased synergies of approximately $1 billion annually to be realized by 2023.
PFE is currently trading at $42.16, down $0.93 or 2.16%, on the NYSE. MYL is currently trading at $20.03, up $1.57 or 8.50%, on the Nasdaq.