Pfizer To Acquire Hospira For $17 Billion

By Jof Enriquez,
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Pfizer this week announced that it has entered into an agreement to acquire Hospira, Inc. for approximately $17 billion in cash and debt. The transaction is expected to close in the second half of 2015 after regulatory and other closing conditions are met. Pfizer claims that the deal will immediately increase earnings and save the company about $800 million annually over the next three years.

Hospira is a leading manufacturer of generic injectable drugs and biosimilars, as well as the syringes, bags, vials, infusion pumps, and other delivery devices.

According to a Pfizer press release, the deal to merge with Hospira will boost Pfizer’s own generic drug division, called the Global Established Pharmaceutical (GEP) business. Together with Hospira, Pfizer said it will form a leading global sterile injectables business.

"Hospira’s business aligns well with our new commercial structure and is an excellent strategic fit for our Global Established Pharmaceutical business, which will benefit from a significantly enhanced product portfolio in growing markets," Ian Read, chairman and CEO, Pfizer, said in the release. "Coupled with Pfizer’s global reach, Hospira is expected to drive greater sustainability for our Global Established Pharmaceutical business over the long term."

The deal also nets Pfizer a substantial medical device portfolio. In addition to drugs, Hospira makes intravenous sets and catheters, infusion pumps, and other medical management systems used in many hospitals.

Pfizer has lost patent protection for best-selling brands such as Lipitor and Viagra in recent years. With the Hospira deal, Pfizer can recoup lost revenue and potentially become a major player in the burgeoning markets for generic drugs and biosimilars. The global market for generic sterile injectables is expected to be worth $70 billion in 2020, while the growing biosimilars market is estimated to be approximately $20 billion by the same year, according to the company's press release.

Hospira reported $4.4 billion in revenue last year, while Pfizer reported a 4 percent drop in revenue last year to $49.6 billion. It also suffered a 58 percent loss in net income to $9.14 billion, the Wall Street Journal reports.

Pfizer’s Read said the Hospira deal would not affect future plans of breaking up Pfizer by 2017, if an accounting analysis determines it makes sense, Reuters reports.