Pfizer and Wyeth

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The corporate merger that I will be discussing is Pfizer and Wyeth. This was the largest merger since AT&T acquired Bell South in 2006 in the amount of 86 billion dollars. Pfizer is the world’s largest drug company and has been in existence since the mid 1800’s and at the time of acquisition Wyeth was the ninth largest. The Pfizer merger finalization happened in October 2009 and the final cost was 68 billion. Before Pfizer bought Wyeth their stock was trading at $17.45 as of January 23, 2009 (Bloomberg Business Week) and when they publicly announced they were going to acquire Wyeth their stock price dropped 10%. After the acquisition finalized on October 15, 2009 the trading price had recovered to a high of $18.43 during that week. Since then their price has stabilized and is currently trading at a high of $22.00 a share. The anticipated sources of the improved profitability were to increase revenue, cut costs, and diversify its line of products. Per Jim Hall, partner in the health-care practice of the management consultancy Oliver Wyman., “Pfizer currently has one of the largest sales forces in the industry, some 7,000 strong. Hall notes that Wyeth's antibiotics and specialty drugs don't require a lot of marketing to consumers, as statins do, and Pfizer may regard that as a big plus” (Bloomberg Business Week). The lack of innovation and inevitable loss in revenues due to expiring patents was a huge concern for Pfizer. Per Catherine Arnst, “Due to other patent expirations, Pfizer is facing a loss of more than 70% of its 2007 revenues by 2015, and there are no equivalent blockbusters in its development pipeline” (Bloomberg Business Week). Wyeth has established themselves as a profitable pharmaceutical company that held patents on specific biologic drugs, consumer health products (Centrum vitamins), animal health business, and vaccines. Information collected from the New York Time stated, “In May of 2010 Pfizer reported revenues of $17.33...
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