Pfizer eyes Wyeth's drug pipeline

The pharma giant is slashing its own research and development staff, analysts say, and hoping a competitor can fill the void.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Aaron Smith, staff writer

Do you expect to change jobs soon?
  • Yes, I'm worried about layoffs.
  • Yes, I'm hoping to move up.
  • No, fingers crossed. I'm happy where I am.
  • Not sure.

NEW YORK ( -- Pfizer is looking to a rival drugmaker to fortify its drug research and development efforts according to news reports and analysts.

Pfizer, which is the world's leading drugmaker in terms of sales, is in talks to buy Wyeth (WYE, Fortune 500) for at least $60 billion, according to the Wall Street Journal. Pfizer's stock slipped 1% on the news, while Wyeth is up about 8%.

Just days ago, on Jan. 13, Pfizer (PFE, Fortune 500) said it was cutting up to 8% of its R&D staff - about 800 jobs. Spokesman Raymond Kerins said this was to "raise productivity."

Spokesman from both companies declined to comment on any deal.

But analysts say that Pfizer is clearly trying to beef up its drug pipeline through an acquisition, adding that the company seems to have given up on its own R&D staff to come up with a blockbuster replace Lipitor. This cholesterol-cutting drug peaked in 2006 with nearly $13 billion in annual sales but will lose its patent protection in 2011, when generic versions will become available.

Les Funtleyder, pharma analyst for Miller Tabak, said that Pfizer is "not feeling that they're getting the efficiency out of their R&D unit." He said that Pfizer would probably rather do a deal with Wyeth over other competitors, because there is less overlap in the companies' pipelines.

Funtleyder said that Pfizer already has a diabetes franchise, which would overlap with Eli Lilly & Co. (LLY, Fortune 500) and Bristol-Myers Squibb (BMY, Fortune 500), both of which also focus on diabetes treatments. Pfizer probably has its eyes on Wyeth's Alzheimer's drug pipeline, he said. But he cautions that a merger won't be successful unless Wyeth's pipeline is successful, which remains to be seen, he said.

"If Wyeth comes out with an Alzheimer's drug that works, then the deal works," he said.

Pfizer is probably also focused on Wyeth's blockbuster children's vaccine Prevnar, said Michael Krensavage of Krensavage Asset Management, as well as its experimental biotech drugs.

Sales of Prevnar, which combats meningitis and blood infections, jumped 12% in the first nine months of 2008 compared to the same period the prior year, to $2.1 billion.

If a deal does go through, Funtleyder warns that Wyeth staffers should brace themselves for lay-offs.

"I can say with pretty good confidence that this is going to lead to some head count reduction," he said. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
15 top executives with $1 salaries Some CEOs and founders agree to salaries of just $1 a year. But once goodies like bonuses and stock options are added in, some of those executives end up taking home many millions of dollars a year. More
Mercedes SL65 AMG: 621 horses of topless power Turn heads as you blow by traffic in this roadster convertible from Mercedes. More
Where the middle class is most unequal CNNMoney looks at the five states with the biggest differences in middle class incomes. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.