Healthcare

Pfizer to acquire King Pharmaceuticals for $3.6 billion.

15 Oct 2010, by Informa Insights

Expert comment from Datamonitor principal analyst Simon King:
“The King acquisition represents a small but integral part of a broader diversification strategy that continues to be implemented by Pfizer. This strategy has to date encompassed the multi-billion dollar acquisition of Wyeth but also various in-licensing agreements and a concerted movement into the generics market as a means to drive growth in the emerging markets.

“By 2015, we estimate that King Pharmaceuticals will be the leading player in the US market for opioid pain relief therapies, so this is an important strike for Pfizer.

“In addition, the acquisition will provide Pfizer with access to a number of formulation technologies that are specifically designed to prevent misuse/abuse of pain relief treatments, adding further barriers to competition, beyond patent protection.

“King is predominantly a sales and marketing operation and reports minimal R&D expenditure; it has historically used in-licensing agreements, product and corporate acquisitions to build its portfolio. Given its significant sales and marketing capabilities in the US market—the sole territory where King operates—the acquisition will provide substantial opportunity for Pfizer to both reduce SG&A costs but also expand revenues.

“We also anticipate that Pfizer will utilise heavy promotion of the anti-misuse technologies acquired from King to drive sales growth for its newly enhanced pain relief portfolio offering.
“Meanwhile, integration of revenues from the King acquisition will have minimal impact on Pfizer’s sales growth outlook over the next few years, which will be negatively shaped by the loss of patent exclusivity for its best selling brand Lipitor, which generated global sales of $11.4 billion in 2009.”

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