Pfizer and Wyeth - a $90 billion deal?

Beset by cost-cutting, layoffs, and high-profile drug failures, what’s a big pharma to do?

How about spend $90 billion to take out a competitor?

That’s what a Credit Suisse drug industry analyst recommends for Pfizer, the troubled, top-heavy drug giant in the midst of a drastic restructuring from its executive suite to its far-flung labs and sales offices. In a report released Monday Credit Suisse’s Catherine Arnold wrote that Wyeth is ripe, and Pfizer should do the plucking.

Wyeth’s stock is down $16.64, or 27 percent, from a late-June high of $62.20 after a series of pipeline setbacks. Even with its shares in decline, Wyeth has a market capitalization of more than $60 billion and has produced $21 billion in revenues the past 12 months.

Ms. Arnold saw a $69 per share takeout price for Wyeth, which would push the total outlay into the $90 billion range. But why Pfizer? The main reason is that Pfizer could pick up Wyeth’s biologics business. Pfizer doesn’t have one and biotech drugs have become some of industry’s most lucrative offerings.

NYT