Merger mania continues in the pharmaceutical industry. Pharma giant Pfizer announced on Thursday, February 5th that it has come to an agreement to acquire leading injectable drug and biosimilars producer Hospira. The deal calls for Pfizer to pay $90 per Hospira share, valuing the company at just over $17 billion.
Pfizer’s statement notes the deal is expected to be immediately accretive upon closing, accretive by $0.10-$0.12 per share in the first full year after the merger is final with additional accretion anticipated.
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Pfizer noted its expanded portfolio of sterile injectable pharmaceuticals, including acute care and oncology injectables, as well as its biosimilars portfolio, together with GEP’s branded sterile injectables, including anti-infectives, anti-inflammatories and cytotoxics, will create a leading global sterile injectables business.
Moreover, the addition of Hospira’s biosimilars portfolio also reinforces GEP’s growth strategy to build a broad portfolio of biosimilars in Pfizer’s therapeutic areas of strength. Pfizer is planning to leverage its commercial capabilities, global scale and scientific expertise to greatly expand the reach of Hospira’s products.
If note, both sterile injectables and biosimilars are rapid growth categories. The global marketplace value for generic sterile injectables is projected to be $70 billion by 2020. The global marketplace for biosimilars is anticipated to top $20 billion by 2020.
The transaction will be financed through a combination of existing cash and new debt, two-thirds cash, one-third debt. Moreover, Pfizer believes the merger will deliver $800 million in annual cost savings by 2018.
Statements from Pfizer and Hospira CEOs
“The proposed acquisition of Hospira demonstrates our commitment to prudently deploy capital to create shareholder value and deliver incremental revenue and EPS growth in the near-term,” commented Ian Read, Pfizer’s Chairman and CEO. “In addition, Hospira’s business aligns well with our new commercial structure and is an excellent strategic fit for our Global Established Pharmaceutical business, which will benefit from a significantly enhanced product portfolio in growing markets. Coupled with Pfizer’s global reach, Hospira is expected to drive greater sustainability for our Global Established Pharmaceutical business over the long term.”
“The Pfizer-Hospira combination is an excellent strategic fit, presenting a unique opportunity to leverage the complementary strengths of our robust portfolios and rich pipelines,” noted F. Michael Ball, CEO of Hospira. “I want to recognize and thank our 19,000 employees around the world for their tireless efforts to deliver more affordable healthcare solutions, increase patient access to high-quality care and drive sustained growth for our shareholders.”