King-sized buyout for King Pharmaceuticals

King Pharmaceuticals has accepted an offer from Pfizer to merge. This will put the number of pharma mergers this year to an unparalleled number. King Pharmaceuticals will definitely cost Pfizer over $ 3.5 billion, making it the 2nd largest purchase ever by the world’s largest drug company. Numerous of these drug mergers are intended to fight the loss of income that comes when a patent runs out.

Pay out the quality for King Pharmaceuticals

Pfizer declared to pay 40 percent over King’s current stock price to purchase King Pharmaceuticals. In Mon trading, the price of King jumped to nearly match the offer price. Pfizer saw the value that King Pharmaceuticals has. King manufactures pain medication mostly. The entire portfolio of King Pharmaceuticals drugs could be rolled into Pfizer’s manufacturing and marketing divisions.

Broadening the Pfizer portfolio

Pain medication is what King Pharmaceuticals specializes in. This mostly what is made by it. King has been long developing “abuse-resistant” pain medicine intended to replace drugs such as OxyContin. King Pharmaceuticals also develops and sells veterinary drugs and also the EpiPen. King Pharmaceuticals also has a contract with the Department of Defense to provide pre-filled syringes of anti-nerve agent medications. Pfizer and King will merge operations which will merge all contracts.

Pfizer and King trying to keep away from patent cliff

Mergers and buyouts have took place before. This isn’t the first. Through buyouts, Pfizer has become the largest drug maker and seller in the world. Pfzier, as well as King Pharmaceuticals, faces a severe income trouble in what the industry refers to as the “patent cliff.”. Anytime a drug comes to the sector, it gets a patent. This protects it at first. Generic versions of the drugs cannot be manufactured until the patent expires. Once Lipitor hits the patents cliff, Pfizer’s best selling drug will get a 60 percent drop in the millions of dollars that come in with sales. The change in drug collection and change of ownership for King Pharmaceuticals could very well make up for the income loss.

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/