Original Story: detroitnews.com
Pfizer and Allergan are joining in the biggest buyout of the year, a $160 billion stock deal that will create the world’s largest drugmaker. A Boston M&A lawyer provides professional legal counsel and extensive experience in many aspects of mergers, acquisitions, and divestitures.
It’s also the largest so-called inversion, where an American corporation combines with a company headquartered in a country with a lower corporate tax rate, saving potentially millions each year in U.S. taxes.
Pfizer, which makes the cholesterol fighter Lipitor, will keep its global operational headquarters in New York. But the drugmaker will combine with Botox-maker Allergan as a company that will be called Pfizer Plc. That company would have its legal domicile and principal executive offices in Ireland.
The combination will essentially be Pfizer “but with a lower tax rate,” wrote Bernstein analyst Dr. Tim Anderson. He said he expects a tax rate of about 18 percent after the deal, which compares to Pfizer’s current rate of 25 percent. An Istanbul M&A lawyer offers full legal services on a wide range of corporate M&A transactions.
Several U.S. drugmakers have performed inversions through acquisitions in the past several years, in part to escape higher U.S. corporate tax rates. The list of companies includes Allergan, which still runs much of its operation out of New Jersey, and the generic drugmaker Mylan.
Last year, Pfizer unsuccessfully tried to buy British drugmaker AstraZeneca Plc in a roughly $118 billion deal that would have involved an inversion. Those talks eventually collapsed when the two sides couldn’t agree on a price.
U.S. efforts to limit inversions have so far proven ineffectual.
Last year, the U.S. Treasury Department initiated new regulations designed to curb the financial benefits of inversions. The rules bar certain techniques that companies use to lower their tax bills and tighten ownership requirements.
The issue has become political heading into the presidential election.
Billionaire investor Carl Icahn recently announced that he was setting up a $150 million super PAC bent on revising U.S. corporate tax law and ending the practice, ratcheting up political pressure even more. A Tokyo M&A lawyer has abundant experience in organizational restructures and M&A.
Aside from a lower tax bill, the Allergan acquisition would give Pfizer brand-name medicines for eye conditions, infections and heart disease. They would join Pfizer’s extensive portfolio of vaccines and drugs for cancer, pain, erectile dysfunction and other conditions.
The deal would enable Pfizer, the world’s second-biggest drugmaker by revenue, to surpass Switzerland’s Novartis AG and regain the industry’s top spot.
Pfizer has done three sizeable deals since 2000 to boost revenue, and the Allergan offer comes as generic competition to blockbuster drugs like Lipitor is expected to cut Pfizer’s sales by $28 billion from 2010 through next year.
Allergan shareholders will receive 11.3 shares of the combined company for each of their shares, while Pfizer stockholders will get one share of the combined company. The deal is valued at $363.63 per Allergan share.
The Allergan deal is expected to close in the second half of 2016. Pfizer stock owners will hold an approximately 56 percent stake in the combined company, while Allergan shareholders will own the remaining 44 percent.
Pfizer Inc. Chairman and CEO Ian Read will serve in the same roles with the combined company while Allergan Plc. leader Brent Saunders will become president and chief operating officer. All 11 of Pfizer’s directors will serve on the board of the combined business, along with four Allergan directors.
Showing posts with label pfizer. Show all posts
Showing posts with label pfizer. Show all posts
Wednesday, December 2, 2015
Monday, May 12, 2014
M&A frenzy as Pfizer amasses AstraZeneca critics
Original Story: USAToday.com
LONDON — Fears that a proposed $106 billion takeover of British pharmaceuticals firm AstraZeneca by Pfizer, its New York-based rival that makes the erectile dysfunction drug Viagra, would lead to job losses and tax sidestepping is ruffling political feathers on both sides of the Atlantic even as merger activity in the pharma sector hits record levels. A San Francisco M&A Lawyer says this will affect the U.S.
Since the start of the year, the value of deal-making maneuvers in the global pharmaceutical sector has hit nearly $240 billion, making 2014 the busiest year ever, according to Thomson Reuters data.
"What the Pfizer bid for AstraZeneca has done is to highlight that the next cycle in the bio-pharmaceutical business is M&A," says Basil Petrides, an analyst at Beaufort Securities, a London-based wealth management company.
"There are always synergies to be had in terms of minimizing overlap, but the deals we have seen recently are not necessarily all about cost-cutting either," he says. "Intellectual property rights on drugs only last for a certain amount of years and after that they are opened up to other manufacturers. Pfizer has been circling this deal for a long time. Its pipeline of drugs is slowly eroding and the easiest way to get value for shareholders is to take over companies that have 'pipe' and proven technology."
In addition to Pfizer's spurned cash and stock bid for AstraZeneca on May 2 — worth a bit less after shares in Britain's second-largest drugs firm closed down 2.4% Friday — Germany's Bayer agreed to purchase New Jersey-headquartered Merck's consumer care business on May 6 for $14.2 billion.
On April 22, activist investor Bill Ackman teamed up with Canada's Valeant Pharmaceuticals for a $47 billion bid for Allergen, the maker of Botox. That same day, Novartis of Switzerland and Britain's GlaxoSmithKline said they would swap assets and combine units in a deal valued at around $16 billion. A New York M&A Lawyer is not surprised by the numbers.
Pfizer's so-far rebuffed interest in AstraZeneca is confronting particularly intensive scrutiny in Britain though. The pharmaceutical industry is thought of, by Prime Minister David Cameron's coalition government and key by opposition parties, as a "jewel in Britain's scientific and industrial crown," as the Association of the British Pharmaceutical Industry (ABPI) has put it.
The ABPI, whose current president is Pfizer's managing director in Britain, declined to comment on the proposed deal, but did provide data showing that the pharmaceutical industry directly employs 73,000 people in Britain and as a sector "represents 25% of all expenditure on R&D in U.K. businesses" — a figure that fell to about $29 billion in 2012, according to the Office for National Statistics.
Critics of the deal say losing AstraZeneca, which employs around 6,700 workers in Britain and makes a sizable contribution to its R&D efforts, would weaken Britain's claim to being a major global player in science and technology. Foes of the proposal, including the opposition Labour Party leader Ed Miliband, accuse Cameron of being a "cheerleader" for the takeover, arguing that Pfizer has failed to provide sufficient assurances that it won't shed jobs or gut a planned research center AstraZeneca is building in the technology hub of Cambridge.
''Let me be absolutely clear — I'm not satisfied. I want more. But the way to get more is to engage," Cameron has said, responding to allegations he has been too supportive of the proposal.
Others, including some from the prime minister's Conservative Party, have voiced suspicions that Pfizer is concerned chiefly with lowering its tax liabilities by shifting its domicile to the United Kingdom, where the corporate tax rate is lower, and have called for a public interest test.
"If such a test were applied in this case, then I believe Pfizer's bid would fail. It doesn't have a great track record in honoring its undertakings and the suspicion remains it is primarily interested in reducing its tax bill," David Davis, a senior Conservative politician, told the Times of London.
On Tuesday and Wednesday, Ian Read, Pfizer's Scottish-born CEO, and Pascal Soriot, AstraZeneca's French boss, will appear before two separate panels of British lawmakers to face questioning about the deal's potential impact.
One relatively recent test case that may arise is U.S. foods company Kraft's 2010 takeover of British chocolate maker Cadbury. "Kraft implied it was going to keep staff on at Cadbury, but as soon as the deal was done it didn't," says Petrides, the Beaufort analyst. A factory that was slated to remain open was also closed.
Anders Borg, Sweden's foreign minister, already warned this week that Pfizer failed to live up to pledges it made over keeping jobs in that country following its acquisition of drug maker Pharmacia in 2002.
"Our experience shows that their track record is not very convincing and I think one should take these kind of promises not only with a pinch of salt but a sack full of salt," Borg said, speaking on British radio.
Capitol Hill is paying attention, too. Sen. Carl Levin, D-Mich, said Thursday he would push for legislation aimed at closing a loophole that permits companies to re-incorporate in overseas territories with lower tax bases.
"Companies that exploit this loophole benefit from the protections and services the federal government provides, including patent protection, research and development tax credits, national security and more," said Levin. Senate Finance Committee chairman Ron Wyden, D-Ore., supports Levin's initiative.
Also Thursday, Delaware Gov. Jack Markell and Maryland Gov. Martin O'Malley sent a letter to Pfizer's Read, expressing concern over how a deal with the British drug maker may affect the 5,700 workers in their states.
"Our states have invested substantially to make AstraZeneca a success in our communities. Elected officials and the public have a right to know Pfizer's intentions with respect to the key U.S. operations of AstraZeneca and the thousands of employees in our states whose jobs may be jeopardized by Pfizer's desire to reduce its tax liabilities," they wrote.
In a video posted on Pfizer's website over the weekend, Read shot back at critics who have called into doubt his firm's motives, saying the deal would be a "win-win" for society and investors. He has previously written to Cameron, confirming a commitment to Britain's science sector.
Read said Saturday that gaining access to AstraZeneca's R&D was a key motivation for the bid. "When we looked at AstraZeneca, we liked their science. We liked where their science is being done, which is in the U.K., and we know we have good science in the U.K. in Cambridge, Oxford, London and other universities," he said. No new pledges were made.
Since rejecting Pfizer's bid as "inadequate" and subsequent comments from Soriot that shareholders have been "supportive" of that move, AstraZeneca has made few public comments.
LONDON — Fears that a proposed $106 billion takeover of British pharmaceuticals firm AstraZeneca by Pfizer, its New York-based rival that makes the erectile dysfunction drug Viagra, would lead to job losses and tax sidestepping is ruffling political feathers on both sides of the Atlantic even as merger activity in the pharma sector hits record levels. A San Francisco M&A Lawyer says this will affect the U.S.
Since the start of the year, the value of deal-making maneuvers in the global pharmaceutical sector has hit nearly $240 billion, making 2014 the busiest year ever, according to Thomson Reuters data.
"What the Pfizer bid for AstraZeneca has done is to highlight that the next cycle in the bio-pharmaceutical business is M&A," says Basil Petrides, an analyst at Beaufort Securities, a London-based wealth management company.
"There are always synergies to be had in terms of minimizing overlap, but the deals we have seen recently are not necessarily all about cost-cutting either," he says. "Intellectual property rights on drugs only last for a certain amount of years and after that they are opened up to other manufacturers. Pfizer has been circling this deal for a long time. Its pipeline of drugs is slowly eroding and the easiest way to get value for shareholders is to take over companies that have 'pipe' and proven technology."
In addition to Pfizer's spurned cash and stock bid for AstraZeneca on May 2 — worth a bit less after shares in Britain's second-largest drugs firm closed down 2.4% Friday — Germany's Bayer agreed to purchase New Jersey-headquartered Merck's consumer care business on May 6 for $14.2 billion.
On April 22, activist investor Bill Ackman teamed up with Canada's Valeant Pharmaceuticals for a $47 billion bid for Allergen, the maker of Botox. That same day, Novartis of Switzerland and Britain's GlaxoSmithKline said they would swap assets and combine units in a deal valued at around $16 billion. A New York M&A Lawyer is not surprised by the numbers.
Pfizer's so-far rebuffed interest in AstraZeneca is confronting particularly intensive scrutiny in Britain though. The pharmaceutical industry is thought of, by Prime Minister David Cameron's coalition government and key by opposition parties, as a "jewel in Britain's scientific and industrial crown," as the Association of the British Pharmaceutical Industry (ABPI) has put it.
The ABPI, whose current president is Pfizer's managing director in Britain, declined to comment on the proposed deal, but did provide data showing that the pharmaceutical industry directly employs 73,000 people in Britain and as a sector "represents 25% of all expenditure on R&D in U.K. businesses" — a figure that fell to about $29 billion in 2012, according to the Office for National Statistics.
Critics of the deal say losing AstraZeneca, which employs around 6,700 workers in Britain and makes a sizable contribution to its R&D efforts, would weaken Britain's claim to being a major global player in science and technology. Foes of the proposal, including the opposition Labour Party leader Ed Miliband, accuse Cameron of being a "cheerleader" for the takeover, arguing that Pfizer has failed to provide sufficient assurances that it won't shed jobs or gut a planned research center AstraZeneca is building in the technology hub of Cambridge.
''Let me be absolutely clear — I'm not satisfied. I want more. But the way to get more is to engage," Cameron has said, responding to allegations he has been too supportive of the proposal.
Others, including some from the prime minister's Conservative Party, have voiced suspicions that Pfizer is concerned chiefly with lowering its tax liabilities by shifting its domicile to the United Kingdom, where the corporate tax rate is lower, and have called for a public interest test.
"If such a test were applied in this case, then I believe Pfizer's bid would fail. It doesn't have a great track record in honoring its undertakings and the suspicion remains it is primarily interested in reducing its tax bill," David Davis, a senior Conservative politician, told the Times of London.
On Tuesday and Wednesday, Ian Read, Pfizer's Scottish-born CEO, and Pascal Soriot, AstraZeneca's French boss, will appear before two separate panels of British lawmakers to face questioning about the deal's potential impact.
One relatively recent test case that may arise is U.S. foods company Kraft's 2010 takeover of British chocolate maker Cadbury. "Kraft implied it was going to keep staff on at Cadbury, but as soon as the deal was done it didn't," says Petrides, the Beaufort analyst. A factory that was slated to remain open was also closed.
Anders Borg, Sweden's foreign minister, already warned this week that Pfizer failed to live up to pledges it made over keeping jobs in that country following its acquisition of drug maker Pharmacia in 2002.
"Our experience shows that their track record is not very convincing and I think one should take these kind of promises not only with a pinch of salt but a sack full of salt," Borg said, speaking on British radio.
Capitol Hill is paying attention, too. Sen. Carl Levin, D-Mich, said Thursday he would push for legislation aimed at closing a loophole that permits companies to re-incorporate in overseas territories with lower tax bases.
"Companies that exploit this loophole benefit from the protections and services the federal government provides, including patent protection, research and development tax credits, national security and more," said Levin. Senate Finance Committee chairman Ron Wyden, D-Ore., supports Levin's initiative.
Also Thursday, Delaware Gov. Jack Markell and Maryland Gov. Martin O'Malley sent a letter to Pfizer's Read, expressing concern over how a deal with the British drug maker may affect the 5,700 workers in their states.
"Our states have invested substantially to make AstraZeneca a success in our communities. Elected officials and the public have a right to know Pfizer's intentions with respect to the key U.S. operations of AstraZeneca and the thousands of employees in our states whose jobs may be jeopardized by Pfizer's desire to reduce its tax liabilities," they wrote.
In a video posted on Pfizer's website over the weekend, Read shot back at critics who have called into doubt his firm's motives, saying the deal would be a "win-win" for society and investors. He has previously written to Cameron, confirming a commitment to Britain's science sector.
Read said Saturday that gaining access to AstraZeneca's R&D was a key motivation for the bid. "When we looked at AstraZeneca, we liked their science. We liked where their science is being done, which is in the U.K., and we know we have good science in the U.K. in Cambridge, Oxford, London and other universities," he said. No new pledges were made.
Since rejecting Pfizer's bid as "inadequate" and subsequent comments from Soriot that shareholders have been "supportive" of that move, AstraZeneca has made few public comments.
Tuesday, November 9, 2010
Pfizer 3Q Profit down 70 Percent due to Charges
Associated Press
Pharmaceutical giant Pfizer Inc.'s mega-acquisition of Wyeth boosted its third-quarter revenue 39 percent, but hefty charges and a higher tax rate, both related to that $68 billion purchase, dragged its profit down 70 percent, the company said Tuesday.
The New York-based maker of cholesterol blockbuster Lipitor and impotence pill Viagra posted net income of $866 million, or 11 cents per share. That's down from $2.88 billion, or 43 cents per share, a year earlier.
Excluding one-time items totaling $3.51 billion, or 43 cents a share, the world's largest pharmaceutical company by revenue said net income would have been $4.37 billion, or 54 cents per share. That topped Wall Street expectations by 3 cents.
Pfizer raised its 2010 profit forecast, to a range of $2.17 to $2.22 per share excluding one-time items, from the prior guidance of $2.10 to $2.20 per share. Analyst expect $2.22 per share. But it lowered the top end of its revenue projection by $1 billion, to a range of $67 billion to $68 billion.
Revenue, while up from $11.62 billion in 2009's third quarter because of Wyeth's products, came up short of expectations at $16.17 billion. Analysts surveyed by Thomson Reuters were expecting, on average, revenue of $16.68 billion.
In afternoon trading, Pfizer shares fell 33 cents, or 1.9 percent, to $17.29.
Pfizer is the last major U.S. drugmaker to report its results. Because of the weak global economy and demands from European health programs for price cuts, Pfizer - as did many of its peers - missed Wall Street revenue expectations but managed to beat muted earnings-per-share expectations. That was the case for Johnson & Johnson, Eli Lilly and Co., Bristol-Myers Squibb Co. and Abbott Laboratories. Biotechnology company Amgen Inc., which makes anemia drugs, bucked the trend, narrowly beating revenue expectations and handily topping EPS forecasts.
"Their results followed the same pattern we've seen with peers, missing on the top line but beating EPS estimates due to cost controls," Credit Suisse analyst Catherine Arnold wrote to investors.
Pfizer's one-time items included $499 million for acquisition-related restructuring, $1.16 billion for the gradual decline in the value of intangible assets such as trademarks and brand names and $1.48 billion for asset writedowns related to buying Wyeth on Oct. 15, 2009.
The company also set aside a $701 million reserve for asbestos litigation related to a Pfizer subsidiary, Quigley Co., which is in a long-running bankruptcy reorganization. Quigley was acquired by Pfizer in 1968 and, until the early 1970s, sold products containing asbestos such as linings for furnaces and incinerators.
Sales of prescription drugs, Pfizer's biggest division, jumped 31 percent to $13.95 billion, boosted by the addition of new products from Wyeth such as biologic drug Enbrel for rheumatoid arthritis, Prevnar vaccine against ear and blood infections, and Premarin hormone replacement pills.
Lipitor sales were down 11 percent at $2.53 billion, as competition from generic versions of other cholesterol drugs such as Zocor continues to erode sales. Lipitor, the world's top-selling drug, loses U.S. patent protection in November 2011, and its sales are expected to fall sharply after that. Still, Pfizer reaffirmed its financial guidance for the following year, saying it expects 2012 sales of $65.2 billion to $67.7 billion and earnings per share, excluding one-time items, of $2.25 to $2.35.
Top sellers were Enbrel, at $799 million; Prevnar and a successor vaccine that prevents more strains of pneumococcal disease, with a combined $914 million; and pain treatment Lyrica, up 7 percent at $757 million. Sales were down for Viagra, anti-inflammatory pain reliever Celebrex and blood pressure drug Norvasc.
Sales of veterinary medicines rose 27 percent to $860 million and revenue from Capsugel, which makes capsules for oral medicines and dietary supplements, were flat at $176 million. Pfizer is considering selling that unit.
Pfizer also reported sales of $673 million from consumer health products such as Chap Stick and Centrum vitamins, and $441 million from nutrition products - both Wyeth businesses.
"For the third consecutive full quarter since we closed the Wyeth deal, we are reporting solid operating results," Chief Executive Jeffrey Kindler told analysts during a conference call.
He said Pfizer will expand its pain treatments, a priority area, with its pending $3.6 billion purchase of King Pharmaceuticals Inc., which makes abuse-resistant narcotic painkillers. Kindler noted other deals to expand its sales in emerging markets and its portfolio of drugs for rare diseases.
Analyst Dr. Timothy Anderson at BernsteinResearch, who rates the stock an "Outperform," wrote that Pfizer "has more interesting, immediate pipeline prospects ahead of it, and we are assuming that (Pfizer) will execute on most of these opportunities."
Pfizer shareholders have seen the company's dividend slashed to pay for Wyeth and its share price fall from $48 10 years ago to the high teens now.
Asked how the company will satisfy shareholders, Chief Financial Officer Frank D'Amelio said in an interview that the stock has climbed over the past three months, while Pfizer has been investing in new businesses, boosting sales of older products, buying back stocks and pushing late-stage experimental drugs toward approval. Those include ones to prevent stroke and to treat a genetically based lung cancer.
He said Pfizer's board in December is expected to raise the dividend, now 18 cents per quarter. Pfizer also aims to boost the dividend yield - the annual dividend divided by earnings per share - over the next three years from 33 percent to the industry average of 40 percent.
For the first nine months, net income was $5.37 billion, or 66 cents per share, down from $7.87 billion, or $1.16 per share in the January-September period of 2009. Revenue jumped 50 percent to $50.25 billion, thanks to the addition of sales of Wyeth products.
Thursday, May 20, 2010
Pfizer to Trim 6,000 Jobs, Shut 8 Plants Worldwide
Associated Press
Pfizer Inc. said Tuesday it will cut 6,000 jobs as it trims its manufacturing capacity worldwide after acquiring smaller rival Wyeth last year.
The world's biggest drugmaker says it will cease operations at eight plants in Ireland, Puerto Rico, and the U.S. by the end of 2015, and reduce operations at six other plants over the next several years. The plants make a range of pharmaceutical and consumer health products. Overall, the company operates 78 plants internationally and employs about 116,000 workers.
The New York-based company said in April it would cut 20,000 jobs as part of the Wyeth integration.
"The restructuring of our global plant network is critical to our efforts to remain competitive so that we can continue to meet patient needs and expand the access and affordability of our medicines," said Pfizer global manufacturing president Nat Ricciardi, in a statement.
Under the plan, Pfizer will cut operations at pharmaceutical plants in Caguas, Puerto Rico; Loughbeg, Ireland, and Rouses Point, N.Y. The company plans to shut down injectible medicines plants in Carolina, Puerto Rico and Dublin, Ireland. Other shutdowns include biotechnology plants in Shanbally, Ireland along with consumer health care plants in Richmond, Va. and Pearl River, N.Y.
Pfizer said the timing of specific exits will depend upon the complexity of operations, the amount of time required for product transfers, and other business requirements.
The company has also recommended reductions in several other plants, including Guayama, Puerto Rico; Newbridge, Ireland; Andover, Mass.; Sanford, N.C.; Havant, U.K.; and Illertissen, Germany.
Also, Pfizer said it is evaluating options for its animal health manufacturing sites and recommendations are expected by the end of June.
The world's biggest drugmaker says it will cease operations at eight plants in Ireland, Puerto Rico, and the U.S. by the end of 2015, and reduce operations at six other plants over the next several years. The plants make a range of pharmaceutical and consumer health products. Overall, the company operates 78 plants internationally and employs about 116,000 workers.
The New York-based company said in April it would cut 20,000 jobs as part of the Wyeth integration.
"The restructuring of our global plant network is critical to our efforts to remain competitive so that we can continue to meet patient needs and expand the access and affordability of our medicines," said Pfizer global manufacturing president Nat Ricciardi, in a statement.
Under the plan, Pfizer will cut operations at pharmaceutical plants in Caguas, Puerto Rico; Loughbeg, Ireland, and Rouses Point, N.Y. The company plans to shut down injectible medicines plants in Carolina, Puerto Rico and Dublin, Ireland. Other shutdowns include biotechnology plants in Shanbally, Ireland along with consumer health care plants in Richmond, Va. and Pearl River, N.Y.
Pfizer said the timing of specific exits will depend upon the complexity of operations, the amount of time required for product transfers, and other business requirements.
The company has also recommended reductions in several other plants, including Guayama, Puerto Rico; Newbridge, Ireland; Andover, Mass.; Sanford, N.C.; Havant, U.K.; and Illertissen, Germany.
Also, Pfizer said it is evaluating options for its animal health manufacturing sites and recommendations are expected by the end of June.
Wednesday, September 2, 2009
Pfizer to pay record $2.3B for backing off-label use of drugs
By The Wall Street Journal
WASHINGTON — Pfizer (PFE), the world's largest drugmaker, will pay a record $2.3 billion civil and criminal penalty over the promotion of prescription drugs for uses that have not been approved by regulators, the Justice Department announced Wednesday.
The department said the $2.3 billion settlement included a $1.2 billion criminal fine, the largest criminal fine in U.S. history. The agreement also included a criminal forfeiture of $105 million.
"Combating health care fraud is one of this administration's top priorities," Associate Attorney General Thomas Perelli said in announcing the settlement. He said it illustrates ways the department "can help the American public at a time when budgets are tight and health care costs are rising."
The overall settlement is the largest paid by a drug company for alleged violations of federal drug rules.
The government said the company promoted four prescription drugs, including the pain killer Bextra, as treatments for medical conditions other than those the drugs had been approved for by federal regulators.
Use of drugs for so-called "off-label" medical conditions is not uncommon, but drug manufacturers are prohibited from marketing drugs for uses that have not been approved by the Food and Drug Administration.
A Pfizer subsidiary, Pharmacia and Upjohn, which was acquired in 2003, has entered an agreement to plead guilty to one count of felony misbranding.
"These agreements bring final closure to significant legal matters and help to enhance our focus on what we do best — discovering, developing and delivering innovative medicines to treat patients dealing with some of the world's most debilitating diseases," said Amy Schulman, senior vice president and general counsel of Pfizer.
Authorities said Pfizer's sales team created phony doctor requests for medical information in order to send unsolicited information to doctors about unapproved uses and dosages.
Justice officials discussed details of the deal at a news conference with FBI, federal prosecutors, and Health and Human Services Department officials.
In financial filings in January, the company had indicated that it would pay $2.3 billion over allegations it had marketed the pain reliever Bextra an possibly other drugs for medical conditions different from their approved use. The settlement announced Wednesday also covered Pfizer's promotions of three other drugs: Geodon, an anti-psychotic, Zyvox, an antibiotic, and Lyrica, an anti-epileptic.
Under terms of the settlement, Pfizer must pay $1 billion to compensate Medicaid, Medicare, and other federal health care programs. Some of that money will be shared among the states: New York, for example, will receive $66 million, according to the state's attorney general, Andrew Cuomo.
"Pfizer ripped off New Yorkers and taxpayers across the country to pad its bottom line," Cuomo said. "Pfizer's corrupt practices went so far as sending physicians on exotic junkets as well as wining and dining health care professionals to persuade them to prescribe the company's drugs for patients in taxpayer-funded programs."
Pfizer spokesman Chris Loder confirmed Wednesday that the $2.3 billion charge to the company's earnings had been taken in the fourth quarter of 2008.
"No additional charge to the company's earnings will be recorded in connection with this settlement," he said.
In her statement, Schulman said: "We regret certain actions taken in the past, but are proud of the action we've taken to strengthen our internal controls and pioneer new procedures so that we not only comply with state and federal laws, but also meet the high standards that patients, physicians and the public expect from a leading worldwide company dedicated to healing and better health."
"Corporate integrity is an absolute priority for Pfizer," she said, "and we will continue to take appropriate actions to further enhance our compliance practices and strengthen public trust in our company."
When Pfizer originally disclosed the settlement figure, it also announced plans to acquire rival Wyeth for $68 billion. That deal, which would bolster Pfizer's position as the world's top drug maker by revenue, is expected to close before year's end.
WASHINGTON — Pfizer (PFE), the world's largest drugmaker, will pay a record $2.3 billion civil and criminal penalty over the promotion of prescription drugs for uses that have not been approved by regulators, the Justice Department announced Wednesday.
The department said the $2.3 billion settlement included a $1.2 billion criminal fine, the largest criminal fine in U.S. history. The agreement also included a criminal forfeiture of $105 million.
"Combating health care fraud is one of this administration's top priorities," Associate Attorney General Thomas Perelli said in announcing the settlement. He said it illustrates ways the department "can help the American public at a time when budgets are tight and health care costs are rising."
The overall settlement is the largest paid by a drug company for alleged violations of federal drug rules.
The government said the company promoted four prescription drugs, including the pain killer Bextra, as treatments for medical conditions other than those the drugs had been approved for by federal regulators.
Use of drugs for so-called "off-label" medical conditions is not uncommon, but drug manufacturers are prohibited from marketing drugs for uses that have not been approved by the Food and Drug Administration.
A Pfizer subsidiary, Pharmacia and Upjohn, which was acquired in 2003, has entered an agreement to plead guilty to one count of felony misbranding.
"These agreements bring final closure to significant legal matters and help to enhance our focus on what we do best — discovering, developing and delivering innovative medicines to treat patients dealing with some of the world's most debilitating diseases," said Amy Schulman, senior vice president and general counsel of Pfizer.
Authorities said Pfizer's sales team created phony doctor requests for medical information in order to send unsolicited information to doctors about unapproved uses and dosages.
Justice officials discussed details of the deal at a news conference with FBI, federal prosecutors, and Health and Human Services Department officials.
In financial filings in January, the company had indicated that it would pay $2.3 billion over allegations it had marketed the pain reliever Bextra an possibly other drugs for medical conditions different from their approved use. The settlement announced Wednesday also covered Pfizer's promotions of three other drugs: Geodon, an anti-psychotic, Zyvox, an antibiotic, and Lyrica, an anti-epileptic.
Under terms of the settlement, Pfizer must pay $1 billion to compensate Medicaid, Medicare, and other federal health care programs. Some of that money will be shared among the states: New York, for example, will receive $66 million, according to the state's attorney general, Andrew Cuomo.
"Pfizer ripped off New Yorkers and taxpayers across the country to pad its bottom line," Cuomo said. "Pfizer's corrupt practices went so far as sending physicians on exotic junkets as well as wining and dining health care professionals to persuade them to prescribe the company's drugs for patients in taxpayer-funded programs."
Pfizer spokesman Chris Loder confirmed Wednesday that the $2.3 billion charge to the company's earnings had been taken in the fourth quarter of 2008.
"No additional charge to the company's earnings will be recorded in connection with this settlement," he said.
In her statement, Schulman said: "We regret certain actions taken in the past, but are proud of the action we've taken to strengthen our internal controls and pioneer new procedures so that we not only comply with state and federal laws, but also meet the high standards that patients, physicians and the public expect from a leading worldwide company dedicated to healing and better health."
"Corporate integrity is an absolute priority for Pfizer," she said, "and we will continue to take appropriate actions to further enhance our compliance practices and strengthen public trust in our company."
When Pfizer originally disclosed the settlement figure, it also announced plans to acquire rival Wyeth for $68 billion. That deal, which would bolster Pfizer's position as the world's top drug maker by revenue, is expected to close before year's end.
Monday, October 27, 2008
Drug Makers Cut Expenses
Drug makers Pfizer Inc. and Schering-Plough Corp. posted mixed third-quarter results, as both companies cut costs amid weakness in the market for cholesterol drugs.Pfizer's profit tripled from a year-earlier period weighed down by heavy costs for a scrapped product, but flat quarterly sales reflected generic competition in the U.S. Schering-Plough's profit declined 21% from a year-earlier quarter that was boosted by one-time gains, while sales increased 63% thanks to its acquisition of Organon BioSciences late last year. Both companies reported earnings that, excluding one-time items, were ahead of analysts' expectations.
Pfizer and Schering-Plough displayed their "ability to manage their cost structure," said Edward Jones analyst Linda Bannister. Also, both companies posted strong sales outside the U.S., partly because of favorable exchange rates.
New York-based Pfizer said it was ahead of schedule in a cost-cutting program launched last year, and boosted its targeted reductions for 2008. Among other measures, Pfizer has cut its work force by 14,600 positions since January 2007.
Pfizer, the world's biggest drug maker by sales, has been battling generic competition for its top drugs, and its best-selling drug, the cholesterol-lowering Lipitor, loses patent protection in 2011. At the same time, it has had trouble bringing new products to market and has responded by cutting costs and revamping its drug-research efforts.
For the third quarter, Pfizer said net income rose to $2.28 billion, or 34 cents a share, from $761 million, or 11 cents a share, a year earlier. The latest quarter included a charge of $640 million for Pfizer's settlement of litigation surrounding its pain drugs Celebrex and Bextra, and a charge of $150 million tied to product-returns liabilities. The year-earlier quarter included a charge of $2.1 billion related to Pfizer's decision to stop selling inhaled insulin Exubera.
Excluding the one-time items, earnings would have been 62 cents a share in the latest quarter, up from 58 cents a share a year earlier. The mean earnings estimate of analysts surveyed by Thomson Reuters was 60 cents a share.
Pfizer's third-quarter revenue eased to $11.97 billion from $11.99 billion. U.S. revenue declined 15% to $4.9 billion, while sales outside the U.S. rose 13% to $7.1 billion.
Lipitor sales fell 1% to $3.1 billion, reflecting a 13% decline in the U.S. The drug's sales have been under pressure from the availability of cheaper, generic options for cholesterol treatment.
Pfizer also said the global market for cholesterol drugs is facing decelerating market growth "and increasing cost constraints."
Schering-Plough, Kenilworth, N.J., reported third-quarter net income of $589 million, or 34 cents a share, down from $750 million, or 45 cents a share, a year earlier. Excluding a divestiture-related gain and acquisition-related costs, earnings rose to 39 cents a share from 28 cents. The mean earnings estimate of analysts surveyed by Thomson Reuters was 31 cents a share. Sales rose to $4.58 billion from $2.81 billion.
Combined sales of Vytorin and Zetia, the cholesterol drugs Schering-Plough co-markets with Merck & Co., dropped 15% to $1.1 billion, with lower U.S. sales partly offset by increased sales outside the U.S.
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