What a Combined Allergan and Pfizer Might Actually Look Like

The big question here is simple to ask, but there is not an easy answer: What would a combined Pfizer-Allergan actually look like? If Pfizer were to acquire Allergan, this does come with the potential tax-inversion strategy, at least in some part, and that will bring political attacks. It merges what are in effect multiple companies, when you consider that both companies have made recent mergers (Actavis and Hospira) and both have been restructuring.

Allergan did state that no agreement has been reached and that there is no certainty that discussions will lead to a transaction. The company also said that it would not comment on speculation regarding the terms of a potential transaction.

Here are some comparisons to keep in mind. As a reminder, Actavis merged with Allergan and Pfizer acquired Hospira. Those can change things.

• Market cap: Pfizer $218 billion, Allergan $113 billion
• 2014 revenues: Pfizer $49.6 billion, Allergan $13 billion
• 2014 operating income: Pfizer $13.25 billion, Allergan -$1.26 billion
• 2015 revenues expected: Pfizer $48 billion, Allergan $18.2 billion (but it said $23 billion anticipated in 2015 pro forma sales)

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Pfizer’s key drugs and products from its website include: BeneFIX, Bosulif, Celebrex, Chantix/Champix, Detrol/Detrol LA, Diflucan, Duavee, Eliquis, Enbrel, EpiPen, Genotropin, Inlyta, Lipitor, Lyrica, Medrol, Norvasc, Elelyso, Vyndaqel, Premarin, Prevnar, Pristiq, Quillivant, ReFacto, Spiriva, Sutent, Vfend, Viagra, Xalatan/Xalacom,
Xalkori, Xanax, Xeljanz, Zithromax/Zmax, Zoloft and Zyvox.

Allergan’s branded pharma business features six blockbuster franchises: Dermatology and Aesthetics; CNS; Eye Care; Women’s Health and Urology; GI and Cystic Fibrosis; and Cardiovascular and Infectious Disease. Allergan’s generics portfolio features more than 1,000 generics, branded generics, established brands and over-the-counter (OTC) products. Allergan calls itself the third largest generic manufacturer in the United States, where it continues to operate as Actavis, and Allergan’s biosimilars program is developing treatment options within the oncology therapeutic category.

Honestly, we are just going to have let the chips fall here and make further determinations when more details, internal and regulatory, are available.

The Allergan press release said:

Under any potential scenario with Pfizer, Allergan remains strongly committed to complete the proposed divestment of its global generics business to Teva Pharmaceutical Industries Ltd and expects the generics divestiture transaction to close in the first quarter of 2016. A further announcement will be made when appropriate.

Pfizer’s press release said:

Pfizer confirms that it is in preliminary friendly discussions with Allergan in relation to a potential transaction. Pfizer emphasizes that no agreement has been reached and there can be no certainty that these discussions will lead to a transaction, or as to the terms on which a transaction, if any, might be agreed. Pfizer will not comment on speculation regarding the terms of a potential transaction. Any further announcement will be made if and when appropriate.

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Pfizer and Allergan shares were both halted coming into this release. Pfizer closed at $35.45, has a consensus analyst target of $40.17 and has a 52-week trading range of $28.47 to $36.46. Allergan closed at $287.20, with a consensus price target closer to $357 and a 52-week range of $237.36 to $340.34.