[Ip-health] Bloomberg: Pfizer’s Dealmaker CEO Sharpens Cancer Focus With Plan for Mylan

Thiru Balasubramaniam thiru at keionline.org
Mon Jul 29 00:41:39 PDT 2019


https://www.bloomberg.com/news/articles/2019-07-27/the-troubled-history-of-mylan-founded-by-two-u-s-army-buddies

Deals

Pfizer’s Dealmaker CEO Sharpens Cancer Focus With Plan for Mylan

By Riley Griffin
July 29, 2019, 1:00 AM GMT+2

 Bourla narrows drugmaker’s scope with spinouts, partnerships
 Pfizer may combine off-patent drug unit with Mylan on Monday


Pharmaceutical behemoth Pfizer Inc. has transformed itself under new
leadership through a series of spinouts and joint ventures, mitigating risk
by placing some units at arm’s length while continuing to reap rewards from
them.

Chief Executive Officer Albert Bourla, 57, who took the helm of Pfizer in
January after serving as the drug giant’s operations chief, has rapidly
transformed the drugmaker through a new deal-making strategy. His next
major step may come as soon as Monday with a plan to combine Pfizer’s
less-lucrative off-patent drug business with Mylan NV to form a
generic-drug giant.

Bourla envisions Pfizer as a smaller, more nimble company focused on
innovative medicines and vaccines, unburdened by businesses with little or
no pipeline potential. He’s intent on making Pfizer a stronger competitor
for new cancer therapies. In June, Pfizer agreed to buy Array BioPharma
Inc., a biotechnology company with oncology drugs and experimental
therapies, for $11.4 billion.

To clear the way, Bourla’s new plan would combine Pfizer’s off-patent drug
business Upjohn -- the maker of widely used medications including Lipitor
for cholesterol, Viagra for male impotence and Xanax for anxiety -- with
Mylan. In the potential stock deal, Mylan investors would get 40% of the
company and Pfizer investors would get the remainder, according to people
familiar with the matter who asked not to be identified because the
negotiations are private.

New York-based Pfizer is getting Mylan at a significant discount to its
heyday: The generic drugmaker’s stock has lost three-quarters of its value
since 2015 as the generics market struggles with price erosion and sales
slump in North America. Its stock-market value as of July 26 was $9.5
billion, dwarfed by Pfizer’s $240 billion.

Michael Goettler, who runs Pfizer’s off-patent drug unit, would become CEO
of the combined company, and Mylan Chairman Robert Coury would be executive
chairman, the people said. Current Mylan CEO Heather Bresch would depart.
Mylan President Rajiv Malik, who faces civil suits accusing him of taking
part in an alleged price-fixing scheme, would ultimately leave the combined
company, one of the people said. Mylan is run from Canonsburg,
Pennsylvania, with a legal address in England.

The merger allows Pfizer to move an obsolete business off the balance sheet
while still generating multimillion-dollar cashflows to subsidize its
ever-growing pipeline. The combined company will grant the off-patent
legacy drugs a larger platform with global reach.

Off-Patent Drugs

Future sales growth for Pfizer’s off-patent drugs is heavily dependent on
emerging markets in China and Asia, Bourla said at a conference in January.
“This is a very predictable business. It’s low-risk, high cash-flow
business,” he said. Mylan’s Bresch has also said that China offers her
generic drugmaker an outlet for the sustained growth of its acquired legacy
brands.

This isn’t Pfizer’s only recent spinout. In December, as Bourla
transitioned into his new role, the company decided to separate its
consumer-health business in a joint venture with GlaxoSmithKline Plc that
combines products ranging from Sensodyne toothpaste to Advil. The deal
allowed Pfizer to exit a business after a yearlong sale process failed to
find a buyer, and focus on its pharmaceutical operations.

Bourla has said he is looking to accelerate Pfizer’s growth potential
rather than deliver immediate value to shareholders. The new strategy is a
departure from former CEO Ian Read’s wide-reaching approach to deals with
near-term paydays.

Read spearheaded acquisitions of Hospira Inc. and Medivation Inc. Many
other attempts to remake the drugmaker were thwarted, though. Pfizer failed
in separate $100-billion-plus attempts to acquire AstraZeneca Plc and
Allergan Plc. Read also proposed, then pulled back on, a breakup of the
company.

“Our dogma until a few years back was revenues now or soon when we’re
looking at business development opportunities – that was our bias,” Bourla
said in January. “Right now, I think this is not what we will need.”

-- 
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org


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