Pfizer Buying Canonsburg-Based Mylan, New Company To Run Operations In Pittsburgh
PITTSBURGH (KDKA/AP) -- Pfizer is buying Mylan in an all-stock deal and combining the $10 billion generic pharmaceutical company with its own off-patent branded and generic business.
The Pfizer business, called Upjohn, makes Lipitor, Celebrex and Viagra. Mylan, based just outside of Pittsburgh, is best known for its EpiPen, an injector used to halt life-threatening allergic reactions.
Pfizer Inc. shareholders will own 57 percent of the combined new company and Mylan shareholders will own 43 percent.
Mylan will cease to exist as a company.
"Pfizer is still a $240 billion company while Mylan now is about a $10 to $11 billion company," the chief investment officer at Fragasso Financial Advisors, Michael Godwin, told KDKA's Jon Delano on Monday.
"Even with that. ... that still is a bigger company than Mylan as a stand-alone company is. So Pfizer still is the bigger player in this and owns a majority stake in the new company that's coming to market."
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But Upjohn is to be spun off completely from Pfizer, merging with Mylan to form a separate independent company.
"There has been a lot of controversy surrounding Mylan over the last few years regarding the EpiPen," Godwin said.
"This gives them a way to really diversify their business, go outside of the U.S. and have more products that they can sell outside of the country."
With Upjohn's products in the mix, this deal will expand the products to be offered by the new unnamed company.
"For Mylan, they're getting much more diversification in their portfolio, many more generic drugs," Godwin said.
"Now, they can sell Lipitor, Viagra. Xanax is another drug that's off-patent and part of this deal. They get to go overseas, a bigger market overseas."
The new company will be incorporated in Delaware and run operations in Pittsburgh, Shanghai and Hyderabad, India.
The new company will be domiciled in the United States, unlike Mylan, which is domiciled in the Netherlands with its headquarters in Pittsburgh.
Delano: "You don't think this new company is likely to leave Pittsburgh anytime soon?"
Godwin: "I think that would be pretty hard to do given the scale that Mylan has here and the infrastructure we already have here. And if Pfizer truly wants to separate Upjohn from its core business, it makes the most sense for them to go into the Mylan standpoint."
But there may be some job losses locally.
"There's going to be some cost-cutting," Godwin said.
"Whether that happens on the Upjohn side or the Mylan side in terms of lay-offs because there are going to be some synergies that need to happen on this."
The combination is expected to close in the middle of next year.
Once that happens, Mylan's Board of Directors says CEO Heather Bresch will retire. Bresch is the daughter of West Virginia Sen. Joe Manchin.
In a statement, Mylan says in part, "On behalf of Mylan's Board of Directors, I extend my gratitude and respect for Heather Bresch's years of extraordinary and passionate leadership at Mylan, which helped to pave the way for today's historic announcement regarding the combination of Mylan and Upjohn."
When Mylan raised the price of its EpiPen 500 percent, Bresch was summoned to Congress to testify and took an earful from both parties.
Upjohn's CEO will serve as the CEO of the merged Upjohn-Mylan company and the chairman of Mylan will become the chair of the new company.
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