PHARMACEUTICALS: Deal would create
largest firm in the drug industry
P
FIZER AND ALLERGAN have confirmed they
are in “preliminary friendly discussions” for a potential merger. If it comes to fruition, the deal would be the largest pharmaceutical transaction this year and create the world’s largest drug company. Allergan’s share price jumped almost 10% on Oct. 29 after the talks were revealed, valuing the company at about $123 billion. The combined firm would have annual sales of about $73 billion and close to 100,000 employees. The companies aren’t saying more about the state of their discussions, but earlier in the week Pfizer CEO Ian Read responded to queries about mergers and acquisitions during the company’s third-quarter earnings conference call. Read noted that any acquisition would need to yield operational and financial streamlining while creating better balance between newer, patented pharmaceuticals and older, specialty drugs. That balance would help Pfizer if it acts on a longconsidered plan to break into separate companies focused on the two pharmaceutical segments. Pfizer’s acquisition of specialty generics firm Hospira earlier this year raised speculation of such a split. Allergan would add more heft to the specialty drugs business. A combination with Allergan hits “all of the key metrics,” Leerink stock analyst Seamus Fernandez
said in a note to investors. Moreover, he noted, Allergan’s CEO, Brent Saunders, would be a logical new leader for Pfizer after Read’s eventual retirement. Fernandez expects Pfizer to follow through with the split, but he expects buying Allergan would push it 18–24 months beyond the end-of-2016 timetable earlier promised by Read. An acquisition of Allergan, which is domiciled in Ireland, would also ease Pfizer’s tax burden. Read has been working to find a deal that would lower the pharma giant’s tax rate. Last year Pfizer tried but failed to buy the British firm AstraZeneca via a so-called inversion—a transaction in which a U.S. company buys a smaller overseas firm and relocates its headquarters to enjoy lower taxes. After that and other inversion attempts, the Treasury Department enacted new rules to prevent wholesale use of the technique, but analysts say Allergan’s sales are sufficient to sidestep them. A deal with Pfizer would cap a whirlwind transformation for Allergan. The firm achieved its present form last year after it was the subject of a hostile takeover attempt by Valeant Pharmaceuticals. Actavis stepped in as a white knight, acquired Allergan for $66 billion, and took its name. Prior to that deal, Actavis had grown through sizable combinations with Watson Pharmaceuticals and Warner Chilcott. Its most recent deal had been the acquisition of Forest Laboratories, where Saunders was CEO. And Allergan’s metamorphosis is not over. The company is in the midst of selling its generic drugs business to Teva Pharmaceutical Industries, a transaction Allergan says is on track to be completed early next year—regardless of a possible deal with Pfizer.—
Read NEWSCOM
PFIZER, ALLERGAN IN MERGER TALKS
PFIZER
NEWS OF THE WEEK
Saunders
LISA JARVIS
Last week, NASA’s Saturn-orbiting spacecraft Cassini flew through plumes of water on Saturn’s moon Enceladus. This historic maneuver may help establish the moon’s ability to support life. Scientists recently discovered that a salty ocean lies beneath the ice-covered Enceladus. Similarly, one of Jupiter’s moons, Europa, is also believed to have a sub-ice ocean, making these bodies of intense interest for future missions looking for habitable spots in the solar system. “This is a very big step in a new era of exploring ocean worlds in our solar system,” Curt Niebur, Cassini program scientist at NASA, said at an Oct. 26 conference announcing the flyby. Cassini has flown by Enceladus water plumes, which spray through fractures
in the moon’s icy surface, many times before. However, this event took the craft only 30 km above the surface and directly through the plumes, where spectrometers monitored the chemical makeup of the liquid. During previous flybys, scientists had identified NaCl, CO2, and organic molecules such as methane and formaldehyde in the plumes. With this close flyby, the scientists are looking for confirmation of the presence of H2, which is produced through geothermal chemistry and will help establish Enceladus’s level of hydrothermal activity. The team will spend the coming weeks analyzing the data before announcing their findings.—ELIZABETH
Close-up of Enceladus.
WILSON
CEN.ACS.ORG
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NOVEMBER 2, 2015
NASA/JPL/SPACE SCIENCE INSTITUTE
SPACE SCIENCE Cassini spacecraft dives through water jets on Saturn’s moon
