Pfizer merger

Before the merger of Pfizer and Warner-Lambert Co., Parke Davis, a division of Warner-Lambert, distributed Neurontin. PDR. at 2459. We refer to Pfizer Warner-Lambert (Pfizer) throughout, but some of the activity discussed was carried out by its predecessor Warner-Lambert. 

The pharmaceutical industry in industrialized countries experienced a high rate of merger and acquisition activity in the 1980s and 1990s. Most of the leading pharmaceutical firms in the OECD countries are the result of one or more horizontal mergers. For example, Pfizer is the combination of Pfizer, Warner-Lambert, and Pharmacia, which included Upjohn (Danzon, Epstein, and Nicholson 2003). 

Within the pharmaceutical industry itself, the wish of each company s management to see its firm reach what is considered a critical size remained a constant feature as the century came to an end and the new millennium began. It led to new national and transnational mergers. In France, Sanofi (Elf Aquitaine) merged with Synthelabo (L Oreal) and Laboratoires Pierre Fabre with BioMerieux. Elsewhere the Swedish Astra and the British Zeneca combined their operations Pharmacia-Upjohn took control of Monsanto and two giant firms, Glaxo Wellcome and SmithKline Beecham, announced their intention to combine their activities, which would lead to a group with a turnover of 25 billion, exceeded only by Pfizer after its acquisition of Warner Lambert. 

The stock plunged from nearly 100 at the end of 2000 to the 40s in the summer and early fall of 2002. Merck unexpectedly announced in June 2001 that it would miss its earnings for that year, then followed up in December with the shocker that its earnings for the next year would be flat. On Wall Street, the pressure grew to seek a merger, even as archrival Pfizer swallowed up Warner-Lambert Company, then Pharmacia. 

Seven months after that, with the stock down in the 40s, Emma was still holding on to his Merck shares. But it wasn t based on faith so much any more. The price was just too low now—in fact, the entire market was too depressed—to do any selling. With Pfizer s new merger, I think Merck is going to get left behind rather quickly. I don t know what their strategy is. If I was going to buy anything in the pharmaceutical industry. I d buy Pfizer. ... 

Presumably, too, mergers save money, through layoffs and economies of scale, that can then be used for more research. You fire the blue-collar people, close plants, it buys you two years, maybe three, sums up Evans, the Sanford Bernstein analyst. Pfizer expected to book 270 million in savings from its acquisition of Warner-Lambert and a further 2.5 billion from Pharmacia. Even before the Pharmacia deal, its R D budget was almost double Merck s with Pharmacia, it would be spending over 7 billion, versus less than 3 billion for Merck. Standing alone, Merck didn t have a prayer of coming close. 

For example, in the second quarter of 2003, Pfizer lost 3.67 billion, partly as a result of a drug that was a subsidiary of a subsidiary of a subsidiary acquired several mergers ago. 

Chemical firms have played a prominent role in the wave of international M As, accounting for some of the biggest international mergers of the last decade. Recent examples include British Petroleum-Amoco and Exxon-Mobil in the petroleum industry and Astra-Zeneca Group and Pfizer-Wamer Lambert in pharmaceuticals. Among the top ten industries for cross-border M As in 1998, Oil and Gas Extraction and Chemical and Pharmaceuticals industries rank 1st and 7th, respectively (Kang and Johansson (2000)). 

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