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Pfizer's premium bet on generic drugmaker

Thursday, February 05, 2015 - 02:00

Drugmaker Pfizer is paying a 39 percent premium to buy Hospira in a bid to boost its portfolio of generic injectible drugs and copies of biotech drugs. Bobbi Rebell reports.

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Pfizer finally making a deal, buying Hospira for about $15 billion. The goal: boost its portfolio of generic injectable drugs, and copies of pricey biotech medicines, called biosimilars. Shares of both companies jumped on the news. The deal works out to $90 a share for Hospira. BMO Capital Markets analyst Alex Arfaei saying in a note that the "Valuation seems reasonable, the strategic fit is there" And from Morningstar's Damien Conover: "Despite the high 39% premium to Hospira's stock price, we believe the acquisition price is justified based on Pfizer's ability to unlock more value with its global reach" The proposed takeover is Pfizer's largest since its failed attempt to buy AstraZeneca for $118 billion last year, and is a step towards its promise to deploy capital to boost its shareholder value. Reuters' Rans Pierson: SOUNDBITE: RANSDELL PIERSON, PHARMACEUTICALS REPORTER, REUTERS (ENGLISH) SAYING: "Pfizer really needs new revenue to support its earnings because a lot of its drugs have gone off patent, and they really have not had a very vibrant pipeline of new drugs coming out of their pipeline. It would immediately improve their earnings by 10 or 12 cents a share and also it would enable them to cut costs by $800 million a year." It also extends their bet on an emerging business called biosimilars which aren't yet approved in the U.S. SOUNDBITE: RANSDELL PIERSON, PHARMACEUTICALS REPORTER, REUTERS (ENGLISH) SAYING: "You have to make them in living cells, and it takes a lot of expertise, and a lot of money, and the FDA really did not know how to proceed in allowing these drugs to market but they now do have a plan in place to let them come to market. Pfizer has a stable of about half a dozen they are working on, and Hospira has about a dozen. So these are two leaders in the biosimilar space. We don't have any of those products on the market yet " Pfizer said the Hospira deal would not delay any possible split of Prizer's pharmaceuticals and generic businesses. That could happen in 2017.

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Pfizer's premium bet on generic drugmaker

Thursday, February 05, 2015 - 02:00