Pfizer to buy Pain Drug Maker King Pharma
Pfizer, the world’s largest drug maker, will pay $14.25 a share, a premium of 40 percent over King’s closing share price yesterday, the New York-based company said today in a statement. The purchase will close by the first quarter of 2011.
The deal would be Pfizer’s biggest since its $68 billion purchase of Wyeth last year. King gives Pfizer access to the Flector pain patch and morphine pill Embeda. Pfizer has said it is looking to expand its pain products beyond the arthritis treatment Celebrex and nerve pain remedy Lyrica. King had $1.78 billion in revenue last year and is focused on making pain medications that patients can’t overuse.
“We view King as a solid asset at a somewhat elevated price for Pfizer,” said Joel Levington, managing director with Brookfield Investment Management Inc., said in an email. “The transaction should modestly help Pfizer’s growth profile in 2012 through 2013, and we do not see the deal having an impact on the company’s strong creditworthiness.”
Pfizer, who has been given written warning over the company’s failure to report serious and unexpected potential side effects from some of its drugs, needs new products to help offset the losses expected next year when generic copies of its top-selling drug, the Lipitor cholesterol pill, enter the market.
King has been focused on developing new painkillers since its top-selling blood-pressure pill Altace went generic in 2007. The company acquired Alpharma Inc. the following year for about $1.3 billion to gain rights to Embeda, a morphine pill designed to deter abuse. Embeda was approved by the U.S. Food and Drug Administration in August 2009.
The market for pain relief and management is large and increasing. Physicians in the United States wrote about 320 million prescriptions to treat pain in 2009, Pfizer said. "King's leadership in new formulations of pain treatments designed to discourage common methods of misuse and abuse will provide Pfizer with multiple new drug delivery platforms, while providing potential long-term upside," the company said.
“We are highly impressed by King’s innovative products and technology in the pain relief disease area, as well as by its success in advancing promising compounds in its pipeline,” said Pfizer Chief Executive Officer Jeffrey Kindler in the statement. “The combination of our respective portfolios in this area of unmet medical need is highly complementary and will allow us to offer a fuller spectrum of treatments for patients across the globe who are in need of pain relief and management.”
Pfizer has done 30 deals in the past five years with an average size of $4.13 billion. The average premium paid for pharmaceutical acquisitions over the past 12 months was 24 percent, according to data compiled by Bloomberg.