Pfizer Beefs Up Pain Portfolio With King Pharma Buy

Includes: KG, PFE
by: Pharmalot

In the latest example of how Pfizer (NYSE:PFE) is trying to become a Hollywood-like conglomerate, the drugmaker has agreed to pay $3.6 billion to buy King Pharmaceuticals (KG), which sells various pain medications. Among them is a tamper-resistant form of long-acting morphine called Embeda, which was actually developed by Alpharma, a company that King purchased last year.

King also is developing a tamper-resistant, long-acting form of oxycodone called Remoxy that would compete with a new form of OxyContin that the FDA approved this month for sale by Purdue Pharma. Pfizer will also own the Skelaxin muscle relaxant and the Flector pain patch. The drugmaker has gone on record saying it wants to expand its so-called pain portfolio, which currently includes the Celebrex arthritis drug and the Lyrica nerve treatment.

The move comes, of course, as Pfizer hunkers down to prepare for huge losses in revenue expected next year when the Lipitor cholesterol pill loses patent exclusivity and generic versions go on sale. Last year, Pfizer bought Wyeth and has simultaneously been exiting various areas of research, shedding thousands of jobs and closing various facilities as it tries to remake itself.

Update: The move is not surprising, according to Sanford Bernstein analyst, Tim Anderson, who writes this in an investor note:

For a company the size of Pfizer, with a revenue base of $68 billion, a market cap of $140 billion, and annual operating income of $27 billion, spending $3.6 billion to buy King (annual revenues of $1.5 billion) will not have a dramatic impact on its financials…Our summary view is that King makes sense in certain ways for Pfizer, but the business is not one that likely has tremendous growth ahead of it, and it consists of certain products that are interesting but others that are less-interesting legacy brands that are unlikely to grow.

Disclosure: None