Pfizer buys Allergan for $160 billion

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The biggest pharmaceuticals deal in history is set to go ahead, as Pfizer announces the completion of its much-anticipated $160 billion agreement with Dublin-based Allergan Plc.

Pfizer CEO Ian Read, who will become chief executive and chairman of the new business, commented that:

The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and more therapies to more people around the world.

The new company will be based in Dublin, Ireland, enabling Pfizer to cut its tax rate from 25% to 18%. It will also enable the pharma giant to make better use of significant cash stockpiles it holds outside of the U.S.

Five extraordinary years of mergers and acquisitions

It’s the latest in a spate of mergers and acquisitions in the pharmaceutical industry, motivated in part by drug patent expirations, and increasing competition.

Allergan itself is an amalgamation of many companies, pursued aggressively over the last five years by CEO Brent Saunders, who will take up the position of president and chief operating officer.

The newly formed ‘Pfizer Plc.’ will boast blockbuster drugs such as Lyrica, Prevnar and Enbrel (Pfizer), Botox, Namenda and Linzess (Allergan).

There are expected to be limited synergies available, up to $2 billion annually. The amount is relatively low, as both companies have already announced significant cuts and rationalization programs in recent years, partly through previous mergers.

However, by opening up new markets to some of Allergan’s products, there is growth potential to be expected as a result of the deal, particularly as the two companies’ combined pipeline will contain up to 100 drugs in the mid to late stages of development. Allergan is already anticipating bringing 10-15 new products onto the market in the next few years.

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