It’s official. The wires had been buzzing with rumors for several days, and today Pfizer (New York) announced that it would acquire Wyeth (Madison, NJ) for about $68 billion. The transaction will bolster Pfizer’s pipeline and improve its biopharmaceutical portfolio with the addition of Wyeth’s “Prevnar” pneumococcal vaccine and “Enbrel” arthritis treatment. The resulting company will be so diversified that it expects that no drug will account for more than 10% of its revenue in 2012, according to a Pfizer press release.

Pfizer hopes the deal will improve its finances, too. The company’s net income for the fourth quarter was 90% lower than it was a year ago, according to the Associated Press (AP). The decrease partly resulted from a charge that resolved investigations into off-label promotional practices. Pfizer hopes the merger will increase its fourth-quarter adjusted profit, according to AP, and the company will try to save money through cuts in administrative and information functions and manufacturing sites.

To Tim Anderson, analyst with Sanford C. Bernstein, a huge acquisition was inevitable for Pfizer. “We have, for many quarters now, said that Pfizer essentially has no realistic way of replacing the many drugs that are scheduled to go generic apart from doing a megamerger,” he said, according to Reuters UK.

Though the merger will likely improve Pfizer’s lot in the short term, the company’s recent history raises the question of whether the deal will prove advantageous in the long term. After it bought Warner-Lambert and Pharmacia during the past decade, Pfizer saved money and gained lucrative products such as “Lipitor.” But the company’s performance has flagged recently as savings shrank and its $7-billion annual research budget has not produced successful drugs, according to Reuters UK.

Time will tell whether Pfizer will content itself with the immediate benefits of the acquisition or seek the philosophical and organizational changes that could help it remain an innovator.