Giant drugmaker Pfizer, Inc. (PFE) Tuesday announced its leadership plan and organizational structure for its research and commercial operations to be implemented pursuant to the Wyeth (WYE) acquisition closure. The company agreed to acquire Wyeth in a deal valued at about $68 billion in January. The deal is expected to close at the end of the third quarter or during the fourth quarter of 2009.
In a statement, chief financial officer, Frank D'Amelio, who is leading the integration on behalf of Pfizer, said, With today's announcement we have taken another significant step in preparing for the combining of these two great companies. Having our organizational structure in place is critical to the combined company being operational on Day One, and the appointment of these leaders will accelerate our ability to do so.
The company added that until the acquisition is complete Pfizer and Wyeth leadership would continue in their current roles. However, chief executive officers of both the companies, Jeff Kindler and Bernard Poussot, along with the senior leadership of both companies would work closely to implement the integration process.
The deal, which came in the thick of the financial crisis, creates a pharmaceutical behemoth with combined revenue of about $75 billion. The deal is expected to be accretive to Pfizer's adjusted earnings per share in the second full year after closing and yield cost savings of about $4 billion to be fully realized by the third year after closing.
With patent expirations looming large, and with the pipeline not likely to churn out any new products in the immediate future, the acquisition of Wyeth will help to fill Pfizer's impending revenue gap. Through the acquisition, the New York-based drugmaker will gain the depression drug Effexor and pneumonia vaccine Prevnar to offset some of the sales it begins losing in 2011 when Lipitor loses patent exclusivity and gets generic competition. It would also help offset dwindling sales of Celebrex, which has been impacted severely following the recall of the similar-acting Vioxx.
Wyeth's key drugs include Enbrel, a drug prescribed for rheumatoid arthritis and other auto-immune diseases, antidepressant drugs Effexor and Effexor XR and Prevnar, a pneumococcal vaccine. Enbrel topped $3 billion in total sales, Effexor raked in worldwide revenue of $3.93 billion, while Prevnar notched up sales of $2.72 billion in fiscal 2008.
This is the biggest acquisition in the pharmaceutical sector since 2000, when Glaxo Wellcome Plc acquired SmithKline Beechman Plc for $76 billion. In 2004, Paris-based Sanofi-Synthelabo SA acquired Aventis SA of Strasburg, France, for $64.4 billion to create Sanofi-Aventis SA, France's biggest drugmaker.
The company noted that it would establish a unique research model designed to advance the strong scientific capabilities of both Pfizer and Wyeth. This would provide support to the new company's nine diverse health care businesses. In order to effectively implement the research model, Pfizer would retain eight senior executives from Wyeth at the senior-most level of the organization.
According to the unique research model, Pfizer would split research and development to form two distinct research organizations, PharmaTherapeutics Research Group and BioTherapeutics Research Group.
Creating two distinct, but complementary, research organizations, led by the top scientist from each company, will provide sharper focus, less bureaucracy and clearer accountability in drug discovery, Kindler stated.
The PharmaTherapeutics research group, led by Martin Mackay as president, would focus on the discovery of small molecules and related modalities, and will continue to advance the strong legacy of both Pfizer and Wyeth in small-molecule discovery. Mackay currently heads Pfizer global research & development.
The BioTherapeutics Research Group, led by Mikael Dolsten as president, would focus on large-molecule research, including vaccines. Dolsten currently serves as president of Wyeth research. This group would look to create a broad and deep pipeline in vaccines, antibodies, proteins, peptides, nucleic acids and other novel modalities.
The company added that both Mackay and Dolsten would also be members of Pfizer's executive leadership team, and report directly to Pfizer's Chairman and Chief Executive Officer Jeff Kindler.
These two research groups would be helped by small, focused scientific teams led by world-class chief scientific officers who will act as single points of accountability for delivering medical advances. Emilio Emini will join Pfizer as chief scientific officer of Vaccine Research, while Menelas Pangalos will join Pfizer as chief scientific officer, Neuroscience Research. Emini is now Wyeth's Vaccine Research and Development head, while Pangalos currently serves as Wyeth's Head of Discovery.
I am honored that world-class scientists like Drs. Dolsten, Emini and Pangalos will be joining the outstanding scientists at Pfizer and, as we continue our integration planning, I look forward to our welcoming many more distinguished Wyeth scientists to our organization, Kindler added.
These scientists will help assure Pfizer access to the broadest set of early stage compounds and technologies available to find new medicines for patients, complementing Pfizer's internal research efforts.
The new combined new Pfizer would consist of nine diverse health care businesses, individually led by world-class executives from both Pfizer and Wyeth. These executives would have the resources to pursue attractive growth opportunities and to meet the needs of global patients and customers.
The nine health care businesses would be further reorganized under three broader business groups, with primary care, and specialty care & vaccines being under Pfizer BioPharmaceutical businesses; emerging markets, oncology, and established products being under Specialty care and vaccines business; and animal health, capsugel, consumer health, and nutritional health being under Pfizer diversified businesses.
Kindler would continue to be the chief executive officer of the combined company. Bernard Poussot, chief executive officer of Wyeth, would help in the integration efforts and will continue to provide critical counsel and support until the close of the acquisition.
In Tuesday's regular trading session, PFE is currently trading at $13.61, down $0.10 or 0.73% on a volume of 15.99 million shares. In the past 52-week period, the stock has been trading in a range of $11.62 to $21.57.
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