King Pharmaceuticals being purchased by Pharma monster Pfizer

King Pharmaceuticals has accepted an offer from Pfizer to merge. This will put the number of pharma mergers this year to an unparalleled number. The 2nd merger in 2 years for Pfizer, this is also the second-most-expensive deal. All told, King Pharmaceuticals will cost Pfizer about $ 3.6 billion. When a patent runs out, a drug company can lose lots of money. Numerous of these mergers are meant to fight this effect. Source of article – King Pharmaceuticals to be bought out by Pharma giant Pfizer by Personal Money Store.

Paying a premium is ok if you are getting King Pharmaceuticals

When Pfizer announced that it would be purchasing King Pharmaceuticals, the price declared had been 40 % over King’s current stock price. King’s price jumped to match the offer in trading on Monday. Either way, nevertheless, Pfizer clearly sees value in King Pharma, which manufactures mainly pain medicine. The entire portfolio of King Pharmaceuticals drugs will be rolled into Pfizer’s manufacturing and marketing divisions.

Pfizer gets a far better collection with this

The medication that King Pharmaceuticals makes is pain medication for probably the most part. King has been long developing “abuse-resistant” pain medication meant to replace drugs such as OxyContin. King Pharmaceuticals also sells vet drugs. Also, the EpiPen comes from the company. Also, a contract is already set between the Department of Defense and King Pharmaceuticals where pre-filled syringes of anti-nerve agent medication are made. Pfizer and King will merge operations which will merge all contracts.

Figuring out issues with patent among Pfizer and King

There has been a spate of pharmaceutical mergers and buyouts in recent years. Through buyouts, Pfizer has become the largest drug maker and seller in the world. The problems that come with Pfizer and King Pharmaceuticals are referred to as a “patent cliff” by the business. Most drugs, when they first are approved and reach industry, are protected by patents. Generic versions of the drugs cannot be manufactured until the patent runs out. Once Lipitor hits the patents cliff, Pfizer’s best selling drug will get a 60 percent drop within the millions of dollars that come in with sales. Hopefully, the income loss could be made up. This is why King Pharmaceuticals was bought off and is getting a change in portfolio.

Citations

Associated Press

google.com/hostednews/ap/article/ALeqM5hbaoWbl-qz6f2UkSXhOhVLnVHFrwD9IQB2C01?docId=D9IQB2C01

NY Times

dealbook.blogs.nytimes.com/2010/10/12/pfizer-to-buy-king-pharmaceuticals-for-3-6-billion/