Are companies strategising their inorganic growth any better amid global turmoil? B&E presents an in-depth analyses of some top global and Indian M&As...
pfizer: wyeth
Pfizer’s been lucky so far…
...but will it keep the flame burning with Wyeth is still a mystery
Combine the two and there you have your eyes opened, and wide! Perhaps Pfizer’s decision to acquire Wyeth for a whopping $68 billion could not have been more timely. But is there sound logic behind it?
No doubt, in the name of cost synergies, Pfizer hopes to save $4 billion annually in operational costs via streamlining of activities. But then that’s not the real reason for the merger! In fact, it’s all about finding a new source of revenue that can replace Pfizer’s blockbuster Lipitor (that contributed $6 billion in FY 2008), the patent for which is set to expire in November 2011. But then one shouldn’t forget that Wyeth, too, will lose its patent on two drugs, Effexor (anti-depressionary) and Protonix (for treating heartburn) in 2010 and 2011 respectively. “This acquisition doesn’t reduce the ‘overall’ exposure to patent expirations... what it needs is a couple of good new patents,” agrees David Lugg, Credit Analyst, S&P.
Even the vehicle that the company is using to finance the deal may prove expensive. The $22.5 billion short-term debt through which Pfizer plans to part finance the deal will surely have to be repaid. And in the current downturn, this actually doesn’t sound easy as Brian Tempest, Chairman, Hale & Tempest Co. states, “This funding is certainly surprising keeping the present financial environment in mind.” Even Moody’s Senior Vice President Michael Levesque argues that “Pfizer’s key credit ratios would initially erode from “Aaa” ranges to “Baa” ranges, and the combined Pfizer-Wyeth entity would still have relatively weak scores in patent exposures and late-stage pipeline quality.” Though Pfizer gets a well managed company in Wyeth with a sizeable sales base and tightened cost base; the restructuring and termination of 20,000 staff will definitely be another aspect that will be hard to manage.
No doubt, Pfizer has done some great work with previous big-ticket acquisitions like Warner Lambert and Pharmacia, but whether this will prove to be the third medal for it is still a mystery!
Read more......
pfizer: wyeth
Pfizer’s been lucky so far…
...but will it keep the flame burning with Wyeth is still a mystery
Combine the two and there you have your eyes opened, and wide! Perhaps Pfizer’s decision to acquire Wyeth for a whopping $68 billion could not have been more timely. But is there sound logic behind it?
No doubt, in the name of cost synergies, Pfizer hopes to save $4 billion annually in operational costs via streamlining of activities. But then that’s not the real reason for the merger! In fact, it’s all about finding a new source of revenue that can replace Pfizer’s blockbuster Lipitor (that contributed $6 billion in FY 2008), the patent for which is set to expire in November 2011. But then one shouldn’t forget that Wyeth, too, will lose its patent on two drugs, Effexor (anti-depressionary) and Protonix (for treating heartburn) in 2010 and 2011 respectively. “This acquisition doesn’t reduce the ‘overall’ exposure to patent expirations... what it needs is a couple of good new patents,” agrees David Lugg, Credit Analyst, S&P.
Even the vehicle that the company is using to finance the deal may prove expensive. The $22.5 billion short-term debt through which Pfizer plans to part finance the deal will surely have to be repaid. And in the current downturn, this actually doesn’t sound easy as Brian Tempest, Chairman, Hale & Tempest Co. states, “This funding is certainly surprising keeping the present financial environment in mind.” Even Moody’s Senior Vice President Michael Levesque argues that “Pfizer’s key credit ratios would initially erode from “Aaa” ranges to “Baa” ranges, and the combined Pfizer-Wyeth entity would still have relatively weak scores in patent exposures and late-stage pipeline quality.” Though Pfizer gets a well managed company in Wyeth with a sizeable sales base and tightened cost base; the restructuring and termination of 20,000 staff will definitely be another aspect that will be hard to manage.
No doubt, Pfizer has done some great work with previous big-ticket acquisitions like Warner Lambert and Pharmacia, but whether this will prove to be the third medal for it is still a mystery!
Read more......
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Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM - FLP (Flexi Learning Program)
