To no one’s surprise, Wyeth shareholders approved yesterday the $68-billion merger agreement with Pfizer. The vote was overwhelming: 98% in favor. The final step is the approval by the Federal Trade Commission and international regulators. The mega deal, one in three this year (Merck and Schering Plough; and Roche and Genentech) emphasizes the bottom-line industry mantra: diversify to compete.
Wyeth’s chairman, Bernard Poussot, stated in a release the deal will bring added resources to the company’s biopharmaceutical division as well as to its human, consumer, and animal healthcare divisions. But some industry observers have speculated that Pfizer may sell off Wyeth’s consumer healthcare units. Last week, the European Commission approved the $68 billion deal but required the companies to divest its animal healthcare businesses.
The dwindling number of new chemical entities and the shrinking number of small-molecule blockbusters have made expansion into biologics a necessary strategy. Still uncertain, however, is the effect these shifts will have in employment. Observers have speculated whether the Pfizer-Wyeth deal will include a repeat of the job cuts Pfizer imposed after its mergers with Warner-Lambert in 2000 and Pharmacia in 2003. Pfizer claims the Wyeth deal will be different. The focus, it says, is on building a strong biopharmaceutical unit, not cutting costs. Job cuts will be relatively minimal at 15% (or 20,000 jobs), and the number of sites will most likely be reduced from 46 to 41.
Perhaps the greatest uncertainty is whether the Wyeth deal will echo results from the Warner Lambert agreement, under which Lipitor became the world’s best-selling drug, or will it flake like the Pharmacia deal, under which Celebrex nose-dived Pfizer’s stock?