Pfizer Picks Ups King in Expansion of Pain Franchise

 |  Includes: ALKS, ENDP, KG, PFE
by: The Burrill Report

By Michael Fitzhugh

Pfizer (NYSE:PFE), the world’s largest pharmaceutical company, is moving to bolster its pain medications portfolio with a $3.6 billion acquisition of King Pharmaceuticals (KG). King’s prescription pain treatments, EpiPen epinephrine auto-injector, and animal health business all have complementary counterparts in Pfizer’s organization and are strategically aligned with Pfizer's primary care, established products and animal health units, the company says.

Pfizer of course already has its own lineup of over-the-counter and prescription pain treatments, including Lyrica and Celebrex. King adds Avinza, an extended release drug for common osteoarthritis and lower-back pain, the Flector Patch for acute pain, and Embeda, the first FDA-approved long-acting opioid pain product designed to be crush-resistant to discourage abuse.

In January, Pfizer said it had eight compounds for pain in its “invest to win” category, an area it defines as having “significant unmet medical needs and significant opportunities for innovation and market leadership.” With the addition of both marketed and research-stage opioids and non-opioids in King’s portfolio, it can now offer a “fuller spectrum” of treatments, says Pfizer CEO and chairman Jeff Kindler.

Pfizer’s $14.25 per share offer for King represents a premium of approximately 40 percent to King's pre-announcement closing price on October 11. The tie-up, which remains subject to U.S. regulatory approval, is expected to close late in the fourth quarter of 2010 or during the first quarter of 2011. If completed, it could yield initial cost savings of at least $200 million by the end of 2013, Pfizer says.

U.S. physicians wrote about 320 million prescriptions to treat pain in 2009, according to Pfizer. In addition, Bristol, Tennessee-based King has estimated that about 50 million Americans live with chronic pain.

Opioid dependence has been a tremendous problem in the $15 billion U.S. pain medication market. Endo Pharmaceuticals (NASDAQ:ENDP), which snapped up Qualitest for $1.2 billion in September to expand its own pain relief portfolio, is also working on the problem. Its latest semi-synthetic opioid analgesic is designed to resist crushing, breaking, powdering or pulverizing and has drawn an FDA priority review in recognition of the need for more abuse-resistant products in the market. Alkermes (NASDAQ:ALKS) , which is approaching the problem from another angle, secured FDA approval to use its alcohol addiction drug, Vivitrol, to battle opioid dependence on October 13.