PFIZER is to buy drug manufacturer King Pharmaceuticals for $3.6bn (£2.26m) to strengthen its portfolio before key patents on drugs such as its flagship cholesterol-reducer Lipitor expire next year.
The world’s biggest pharmaceutical company will pay $14.25 (£8.95) per share for King from existing cash, a 40 per cent premium on King’s closing share price on Monday.
Pfizer expects the deal to add about two cents to adjusted earnings per share in 2011 and 2012 and about three to four cents from 2013 to 2015.
It has also reaffirmed its earnings forecast for 2012, when patents will have expired.
Analysts said Pfizer is paying a relatively high premium but cost savings from absorbing King may be higher than announced.
Pfizer expects to make savings of over $200m, half of which should be realised in the first year, but some believe it could be as high as $500m.
The deal follows last year’s $67bn acquisition of Wyeth and is a move to address the huge anticipated revenue loss as Lipitor, the world’s biggest-selling prescription drug, starts to compete with generic alternatives from June 2011.
Lipitor is expected to generate over $11bn revenues this year.
The acquisition will give Pfizer a bigger share in the large and growing prescription pain relief market, where King is a leader.
King recently launched Embeda, the first approved opiate-based pain reliever resistant to narcotic abuse, but generic competition to its drugs has hit profits.
FAST FACTS | Pfizer
Deal brings bigger market share in pain relief.
Pfizer expects to make $200m cost savings realised over three years.
King Pharmaceuticals made $150.6m pre-tax profits on $1.8bn sales last year.