Pfizer and the Spinoff of Upjohn Case Study Help
Introduction
Pfizer the world’s leading pharmaceutical firm which was originated in the United States in the year 1849 and has shown immense growth over the years from a small chemical firm to a globally known company. The company has expanded through several major acquisitions and restructured its business into three divisions in 2018 including innovative medicines focusing on the development of new patentable drugs, Upjohn including off-patent drugs and focusing on growing biosimilar business and consumer healthcare focusing on developing the over-the-counter (OTC).
Drug Business and Providing Healthcare drugs through the expected joint venture with the GlaxoSmithKline’s (GSK). Pfizer announced in July 2019 that it would spin off one of its Upjohn divisions and merge it with Mylan which is one of the leading generic firms. This merger will be operated as a new firm and the total cost that would incur is estimated to be $ 1 billion. While the deal was analyzed by senior research analyst Steve Jackson it appears that the diversification of Upjohn.
Would let Pfizer emphasize the innovation of its drugs and leave the generic sector several questions were raised regarding the future of Pfizer's loss of exclusivity (LOE) drugs, over the years declining shares of the company are also a major concern, how would the company focus on the integration of the deal while it is facing several legal issues and how would the company structure the robust pipeline of new drugs with the projected cost synergies. However, Pfizer has to recognize the potential benefits of spinning off Upjohn and evaluate the viability of the merger considering several factors influencing the decision.
Problem Statement
The proposed merger between Pfizer's Upjohn division and Mylan to create a new company is raising concerns among analysts about the potential for the new company to generate value and growth. Specifically, the concern is that without Pfizer's loss of exclusivity (LOE) assets, which Upjohn currently serves as a conduit for, the new company may struggle to generate growth.
Additionally, there are doubts about Mylan's ability to generate a robust pipeline of new drugs and the projected cost synergies. The central question is whether the proposed merger will be successful in creating a new company that can generate value and growth.
Situational Analysis
Challenges Faced by Pfizer
The challenges faced by the new company resulting from the merger of Pfizer's Upjohn division and Mylan include:
Generating Growth
The new company may struggle to generate growth without Pfizer's loss of exclusivity assets, which Upjohn currently serves as a conduit for. It will be important for the new company to identify other sources of growth to ensure long-term success.
The Pipeline of New Drugs
There are concerns about Mylan's ability to generate a robust pipeline of new drugs. The new company will need to invest in research and development to ensure a strong pipeline of new products.
Cost Synergies
The proposed merger is expected to result in $1 billion in cost synergies, but there are doubts about whether these savings can be achieved. The new company will need to carefully manage costs to ensure that it can remain competitive.
Integration
Mergers can be challenging to integrate successfully. The new company will need to ensure that the two businesses are integrated effectively to avoid disruption to operations and maintain employee morale.
Competition
The pharmaceutical industry is highly competitive, and the new company will face competition from other companies in the industry. It will need to develop a competitive strategy to succeed.
The Future of Pfizer LOE Drugs
It is difficult to assess the future of Pfizer's loss of exclusivity (LOE) drugs following the potential acquisition of Mylan. However, we can estimate some possible scenarios based on the industry trends and the strategic goals of the involved companies.
The company would keep its emphasis on developing and innovating new drugs while maintaining the growth of the newly formed company. Having a focus on the development of new drugs would allow the company to expand into new markets and bring diversification opportunities for the company. This strategy would allow the company to maintain its potential growth and sustainability..........
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