Many large pharmaceutical mergers over the years have resulted in fused identities:
- 1989: Bristol-Myers + Squibb = Bristol-Myers Squibb
- 1999: Zeneca + Astra = AstraZeneca
- 2000: Glaxo Wellcome + SmithKline Beecham = GlaxoSmithKline
- 2004: Sanofi-Synthelabo + Aventis = Sanofi-Aventis
But when Pfizer acquired Wyeth for $68 billion in 2009 the merger created … Pfizer.
Yes, as expected, pfull-of-itselpf Pfizer didn’t budge an inch on its corporate identity when it finalized its acquisition of Wyeth last Thursday. When offices opened Friday morning, Wyeth essentially ceased to exist, leaving many to wonder about future changes within what was already the largest pharmaceutical organization in the world.
Now in terms of marketing and development relationships, I imagine that it will take a good chunk of time for the name Wyeth to fall out of use. But Pfizer began working to integrate the two companies’ operations as soon as the deal was announced earlier this year, with the goal of saving money through the mega-merger from the get-go.
Whether or not it will succeed is a bone of contention among industry analysts – some believe that the team-up of Wyeth and Pfizer will secure the combined entity’s top pharma spot in years to come, while others believe such a large acquisition couldn’t possibly solve the competition and drug development woes of Pfizer (or any other large pharma company, for that matter).
While the deal definitely widens Pfizer’s product offerings (especially in biologics) and adds potential for new blockbuster drugs to come through the pipeline, such mega-mergers can also hinder creative processes simply because they are so large, with so many layers of bureaucracy for innovators to wade through.
While Pfizer obviously worked hard to have certain aspects of dual corporate administrations humming at the final hour, many more changes are sure to come in the near and far future, as Pfizer expects to cut about 15% of the combined workforce and save $2 billion in annual costs.
I imagine that the companies’ drug sales representatives will experience shifts in who markets what and where they are based. (Pharmaceutical companies are generally ruthless when working to wrap their resources around the most promising products.)
Pfizer is wisely keeping things somewhat separate in the R&D arena, though, as Wyeth brings in expertise in vaccines and other biological research areas. The overall R&D organization will have two main divisions headed by existing Pfizer (for pharmaceutical therapeutics) and Wyeth (for biotechnology) executives. I expect that Pfizer will probably shut down some R&D locations as the structure is fleshed out, however.
As Pfizer had exited consumer care back in 2006, the acquired Wyeth consumer health division (think Advil and Robitussin) will probably remain largely intact. Change will be evident in the animal health arena though, as a good chunk of Wyeth’s animal health unit is being sold to Boehringer Ingelheim and what’s left is being massaged to fit in with Pfizer’s larger veterinary products division. Pfizer reportedly plans to base these and other diversified businesses at Wyeth’s former Madison, New Jersey headquarters location.
Overall, this acquisition will probably play out in a typical larger fish-swallows-smaller fish fashion, despite the fact that it was the largest pharma transaction in nearly a decade. While Wyeth was a huge corporation with nearly $23 billion in 2008 revenues, Pfizer was twice as big (with more than $48 billion in sales) and is probably justified in hanging tight to it’s top dog status as a single-name entity for as long as possible. Many other large drug corporations have likewise stuck with one name through years fraught with change.
Merck’s $41 billion pending acquisition of Schering-Plough, which is also expected to close this quarter, looks to be another instance where the corporate identity of the larger entity will prevail, despite the fact that the two entities are closer in size (with revenues of $24 billion and $18.5 billion, respectively).