Date: 2015-08-04
Type of information: Company acquisition
Acquired company: Hospira (USA - IL)
Acquiring company: Pfizer (USA - NY)
Amount: $17 billion
Terms: * On August 4, 2015, the European Commission has approved the proposed acquisition of Hospira by Pfizer under the EU Merger Regulation. Both companies are US based and active globally in the development and marketing of human pharmaceuticals. The approval is conditional on Pfizer divesting certain sterile injectable drugs, as well as its infliximab biosimilar drug, which is currently under development. The Commission expressed concerns that the merged entity would have faced insufficient competitive pressure from the remaining players in the corresponding markets, with a risk of price rises and discontinuation of the development of Pfizer's infliximab biosimilar drug. The commitments offered by the companies address these by removing the overlap between Pfizer and Hospira in all the markets where the Commission identified competition concerns. Infliximab is one of the top three best-selling pharmaceuticals globally, originally developed in the 1990s. It is used to treat autoimmune diseases such as rheumatoid arthritis and Crohn's disease. One biosimilar has been approved for use in the European Economic Area (EEA) (developed by Celltrion but co-marketed by Hospira and Celltrion), and two companies have biosimilars in advanced stages of development (Samsung Bioepis and Pfizer). The investigation showed that competition concerns could arise in the market for infliximab drugs, because following the merger Pfizer would be likely to either delay or discontinue development of its biosimilar drug in order to focus on Hospira's marketed product, leading to the net loss of future competition by one of only three differentiated biosimilars in advanced stages of development (Hospira/Celltrion's, Samsung Bioepis' and Pfizer's) or hand back Hospira's product to its developer Celltrion, leading to the loss of current price competition between Hospira and Celltrion. Both outcomes would be detrimental to competition in the infliximab drug market. Most sterile injectables covered by the investigation are used as chemotherapies in the treatment of cancer. For these pharmaceuticals, the investigation showed that competition concerns could arise for certain molecules in some Member States (namely carboplatin in Belgium; cytarabine in Belgium, Italy, Portugal and Sweden; epirubicin in Austria, Belgium, Italy, the Netherlands and Spain; irinotecan in Belgium, the Czech Republic and Italy; vancomycin in Ireland and voriconazole in the EEA as a whole), in particular because of the high combined market shares of Pfizer and Hospira and the limited number of competitors that would remain in these markets. In order to address the competition concerns identified by the Commission, Pfizer submitted a set of commitments. Following the results of an extensive market test of the initial proposal, the companies offered improved commitments consisting of: - regarding infliximab, full divestment of the development, manufacturing and marketing rights of its infliximab biosimilar drug currently under development (including appropriate intellectual property, technology and know-how), with marketing rights outside the EEA remaining with the merging entity; - regarding sterile injectables, divestment of marketing authorisations and associated rights of Pfizer or Hospira in relation to all problematic molecules in the relevant countries. * On May 13, 2015, Hospira announced that Hospira shareholders voted in favor of the proposal to adopt the merger agreement with Pfizer Inc. at a special meeting of stockholders held today, May 13, 2015, in Denver, Colo. At the Special Meeting, 140.8 million shares were voted in favor of the merger agreement, or 99.4 percent of shares voted for the merger proposal and approximately 81.5 percent of Hospira's outstanding shares. Hospira and Pfizer continue to expect the merger to close in the second half of 2015. * On February 5, 2015, Pfizer and Hospira announced that they have entered into a definitive merger agreement under which Pfizer will acquire Hospira, the world’s leading provider of injectable drugs and infusion technologies and a global leader in biosimilars, for $90 a share in cash for a total enterprise value of approximately $17 billion. The Boards of Directors of both companies have unanimously approved the merger, which is expected to be immediately accretive upon closing, accretive by $0.10 - $0.12 per share for the first full year following the close of the transaction with additional accretion anticipated thereafter. Pfizer expects to finance the transaction through a combination of existing cash and new debt, with approximately two-thirds of the value financed from cash and one-third from debt. In addition, Pfizer anticipates the transaction to deliver $800 million in annual cost savings by 2018. The transaction is subject to customary closing conditions, including regulatory approvals in several jurisdictions and approval of Hospira\'s shareholders, and is expected to close in the second half of 2015. Pfizer\'s financial advisors for the transaction were Guggenheim Securities, J.P. Morgan and Lazard, with Ropes & Gray LLP acting as its legal advisor and Clifford Chance LLP advising on international regulatory matters. Morgan Stanley served as Hospira’s financial advisor, while Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates served as its legal advisor.
The improved commitments fully remove the overlap between Pfizer and Hospira in all the markets where the Commission had identified competition concerns. The Commission was therefore able to conclude that the proposed transaction, as modified by the commitments, would not raise competition concerns. The decision is conditional upon full compliance with the commitments.
* On May 14, 2015, Pfizer announced that it has received a request for additional information from the U.S. Federal Trade Commission (“FTC”) with respect to its previously announced proposed acquisition of Hospira. The request for information from the FTC, often referred to as a “second request,” was anticipated as part of the regulatory process under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”). Pfizer continues to work cooperatively and expeditiously with the FTC in connection with its review. Completion of the transaction remains subject to the expiration of the waiting period under the HSR Act, governmental and regulatory approvals in certain other jurisdictions and other usual and customary closing conditions. Pfizer and Hospira continue to expect the transaction to close in the second half of 2015.
Details: This strategically complementary combination will add a growing revenue stream and a platform for growth for Pfizer’s GEP business. The expanded portfolio of sterile injectable pharmaceuticals, composed of Hospira’s broad generic sterile injectables product line, including acute care and oncology injectables, with a number of differentiated presentations, as well as its biosimilars portfolio, combined with GEP’s branded sterile injectables, including anti-infectives, anti-inflammatories and cytotoxics, will create a leading global sterile injectables business. The combination also reinforces GEP’s growth strategy to build a broad portfolio of biosimilars in Pfizer’s therapeutic areas of strength through the addition of Hospira’s portfolio that includes several marketed biosimilars. Pfizer will also use its existing commercial capabilities, global scale, scientific expertise and world class development capabilities to significantly expand the reach of Hospira’s products, which are currently distributed primarily in the United States, to Europe and key emerging markets, where GEP has a significant presence. Both sterile injectables and biosimilars are large and growing categories. The global marketplace value for generic sterile injectables is estimated to be $70 billion in 2020. The global marketplace for biosimilars is estimated to be approximately $20 billion in 2020.
Related: Generics Biosimilars
