$15 Billion Mega Merger Is About To Happen


The drugmaker Pfizer Inc. said it would buy Hospira Inc. for about $15 billion to gain access to biosimilars, copies of biotech drugs made from living cells.

Pfizer’s offer of $90 per share represents a premium of 39% to Hospira stock’s close Wednesday. Hospira was trading at $88 before the bell, while Pfizer was up 1.7%.

Drugmakers are racing to develop biosimilars, which typically cost 20% to 30% less than the original, as big-ticket patents on biotech drugs expire and cash-strapped healthcare systems look to cut costs.

Biosimilars are expected to account for about a quarter of the $100 billion in sales stemming from off-patent biological drugs by the end of the decade, according to a study compiled by Thomson Reuters BioWorld.

Hospira is seeking approval from the US Food and Drug Administration to market a copy of Johnson & Johnson’s blockbuster arthritis treatment Remicade.

The total enterprise value of the deal is about $17 billion, the companies said.

Hospira had $1.75 billion of outstanding long-term debt as of Sept. 30, according to a regulatory filing.

The deal is expected to add 10 to 12 cents per share to Pfizer’s earnings in the first full year after the deal closes.

Pfizer’s financial advisers are Guggenheim Securities, JPMorgan, and Lazard, with Ropes & Gray LLP serving as legal adviser and Clifford Chance LLP advising on international regulatory matters.

Morgan Stanley is Hospira’s financial adviser, while Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates served as its legal adviser.
This article appeared in Business Insider


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