TRENTON, N.J. — No. 1 drug maker Pfizer Inc. said Monday it is buying No. 12 Wyeth for $68 billion in a deal that ultimately will wipe out nearly 20,000 jobs but will quickly boost Pfizer's revenue and profit and transform it overnight into a medicine cabinet for all.
New York-based Pfizer managed with one stroke to overshadow a full house of problems, some of which would have pummeled its stock: a 90 percent drop in income, a hefty charge for settling government charges of wrongdoing, a severe cut in its dividend, a shockingly low profit forecast for 2009, and 8,000 job cuts starting immediately.
That's all on top of the colossal problem triggering this deal: the expected loss of $13 billion a year in revenue for cholesterol fighter Lipitor starting in November 2011, when Lipitor gets generic competition.
By buying Wyeth, Pfizer will move from being a maker of blockbuster pills to a one-stop shop for vaccines, biotech drugs, traditional pills and non-prescription products for people and animals alike.
Pfizer also said it would cut 8,000 jobs, 10 percent of its work force, as part of an expected staff reduction totaling 15 percent of the combined companies' workers — implying a total job loss of almost 20,000.
The cash-and-stock deal, one of the industry's biggest ever, is expected to close late in the third quarter or in the fourth quarter. It comes as Pfizer's 2007 fourth-quarter profit takes a brutal hit from a $2.3 billion legal settlement over allegations that it marketed pain reliever Bextra and possibly other products for indications that had not been approved.
"In one single transaction, the combination with Wyeth advances every single one of (our) strategies," Pfizer chief executive Jeff Kindler said during a news conference.
Those goals include increasing sales in emerging markets, enhancing the ability to treat specific diseases, such as Alzheimer's, and becoming a top player in vaccines and biologic drugs, which are made from living cells.
Pfizer, the maker of Detrol, for overactive bladders, and impotence pill Viagra, said it will pay $50.19 a share for Madison, N.J.-based Wyeth, a 14.7 percent premium to the company's closing price of $43.74 Friday.