Ian Read, chairman and CEO of Pfizer
US-based global pharmaceuticals giant Pfizer Inc. will acquire Hospira Inc., a leading maker of sterile injectable drugs and infusion technologies, in a deal valued at $17 billion including debt.
Pfizer officials said the acquisition was a good strategic fit that would provide the larger company with a much stronger platform for expanding its sales of pharmaceuticals across the globe, while also creating a much more robust product portfolio.
“Hospira’s business aligns well with our new commercial structure and is an excellent strategic fit,” said Ian Read, chairman and CEO of Pfizer, in a statement.
Hospira, a Lake Forest, Illinois company, had revenues of roughly $4 billion in 2013, the last year for which full results were available. Over 81% of its sales are in the Americas, which includes the United States, Canada, and Latin America, according to a November SEC filing.
Pfizer, whose revenues reached nearly $52 billion in 2013, is a global maker and distributor of medicines for people and animals. The company’s portfolio of products includes human biologic and small molecule medicines and vaccines.
Hospira has a broad sterile injectables product line, which includes acute care and oncology injectables that mesh well with Pfizer’s suite of sterile injectibles, including anti-infectives, anti-inflammatories and cytotoxics, Pfizer said in the release.
The acquisition deal is expected to close in the second half of this year.
Pfizer said the addition would strengthen its Global Established Pharmaceutical business and support its growth strategy to build a broader portfolio of biosimilars, which are pharmaceutical products that represent refinements to older pharmaceuticals by other companies that have come off patent.
Pfizer said it would also leverage its scientific expertise, marketing power and development capabilities to broaden the market for Hospira’s other products. Hospira’s market reach includes Europe, the Middle East and Africa (12% of sales); and the Asia Pacific, including Japan, Australia and New Zealand (7%).
“The addition of Hospira has the potential to fundamentally improve the growth trajectory of the Global Established Pharmaceutical business,” Pfizer said in the release, saying that it hoped for a “leadership position in the large and growing off-patent sterile injectables marketplace.”
Hospira’s revenue growth the past four years has been relatively sluggish, hovering slightly above the $4 billion mark, according to its financial filings. Officials expressed confidence that the two companies combined would catapult sales to significantly higher levels.
F. Michael Ball, CEO of Hospira, called the merger “a unique opportunity to leverage the complementary strengths of our robust portfolios and rich pipelines.”
In the release, Pfizer described the global market for sterile injectables to be large and growing and projected that it would be about $70 billion. They project the worldwide market for biosimilars to be approximately $20 billion by 2020.
Hospira’s specialty injectable pharmaceuticals represented approximately 68% of the company’s global sales for the first 9 months of 2014. Those included acute-care and oncology injectable products, biosimilars and the company’s sedation agent Precedex (dexmedetomidine), the company said in its November SEC filing. Medication management amounted to 19% of global sales and other pharmaceuticals 13% for the same 9-month period.