Pfizer pfe, the world's largest drugmaker, may be seeking to buy rival Wyeth wye in a deal that could be valued at more than $60 billion, the biggest in recent memory.
The Wall Street Journal reported Friday that the companies have been in talks for months, although the report said any deal is not near completion and the state of the global markets could undo any plans.
Such a deal could cheer investors and analysts who have been pushing Pfizer — struggling with flat revenue, diminishing returns on research and looming generic competition to the world's top-selling drug — to make a bold move to get out of its doldrums.
Until now, it has been taking baby steps, cutting staff here, closing plants there and trimming its research portfolio.
But acquiring Madison, N.J.-based Wyeth would transform Pfizer almost overnight from basically a pure pharmaceutical company into a broadly diversified health care giant, given Wyeth's huge presence and revenue in biotech drugs, vaccines including the blockbuster pneumococcal vaccine Prevnar and consumer health products from Advil to Robitussin.
Representatives for both Wyeth and New York-based Pfizer declined to comment.
"It's our policy not to comment on marketplace rumor," Wyeth spokesman Doug Petkus said.
Shares of Wyeth jumped $3.32, or 8.3%, to $42.05 in early trading. Pfizer shares declined 45 cents, or 2.6%, to $16.76. Such declines are typical for a company doing a big acquisition.
Pfizer is the world's top drugmaker by revenue, led by the blockbuster cholesterol drug Lipitor, which tallies about $13 billion in annual sales — about one-quarter of Pfizer's entire revenue. Lipitor is expected to face generic competition in November 2011, and a high-profile effort to come up with a successor drug flamed out when torcetrapib had to be axed in late-stage testing because it triggered heart problems.
Last fall, Pfizer publicly conceded that failure when it narrowed its research areas and eliminated all new research on heart disease, the world's top killer.
That's left Pfizer Chief Executive Jeff Kindler under pressure to take some kind of preemptive action, with investors upset that its share price is barely one-third of its July 2000 peak of $48.
Wyeth's Heartburn drug Protonix got generic competition last year, when antibiotic Zosyn also lost patent protection, but that drug still has no generic competitors. In any case, Wyeth's fortunes don't depend as heavily on any one drug as Pfizer's do on Lipitor.
Wyeth is now one of the world's top biotech drugmakers and most of its revenue now comes from those drugs, vaccines and veterinary medicines, not chemically synthesized pills.
Wyeth's stable of consumer products — including household names such as Chap Stick, Centrum vitamins, pain reliever Anacin and Preparation H — is nearly as valuable as the iconic brands Pfizer sold to Johnson & Johnson jnj three years ago when it chose to get out of consumer health and focus on pharmaceuticals. That decision is now questioned by some analysts.
Analysts have predicted tie-ups in the pharmaceutical industry in recent months as most big companies prepare for a wave of major patent expirations over the next few years. Like most rivals, Pfizer and Wyeth have slashed jobs and other costs to prepare for that period, and Pfizer is widely expected to announce plans to eliminate one-third of its sales force when it announces fourth-quarter earnings Wednesday, the day before Wyeth releases its results.
At the same time, the Food and Drug Administration has become more reluctant to approve new drugs, leading to greater research expenses and costly delays in getting drugs approved.
Pfizer and Wyeth have responded by focusing on specific disease and scrapping research areas considered less promising. Pfizer is concentrating on Alzheimer's disease, cancer, schizophrenia, pain, inflammation and diabetes. Wyeth's core areas are cancer vaccines and drugs, neurological disorders, inflammation, metabolic disorders and musculoskeletal conditions.
Wyeth got three drugs approved last year — antidepressant Pristiq, Relistor for constipation caused by narcotic painkillers, and the hemophilia drug Xyntha. But shortly before that it had a grinding stretch where FDA repeatedly shot down its applications or demanded more information.
At more than $60 billion, the deal's price tag would dwarf Eli Lilly's buyout of biotech cancer drug maker ImClone Systems in October.
Wyeth shares closed at $38.83 Thursday and have traded between $49.80 and a 12-year low of $28.06 in the past 12 months. Wyeth's market capitalization is $51.7 billion.
In November, Pfizer shares set an 11-year low of $14.26. The stock was worth $17.21 at the end of trading on Thursday. The company has a market capitalization of about $116 billion.
AP Business Writer Marley Seaman in New York contributed to this report.