Pfizer plans to combine its non-patented drug business with Mylan

Pfizer, the largest drug manufacturer in the world, plans to divest its non-patented drug business and combine it with generic drug maker Mylan, according to a person familiar with the matter.

The transaction, which is expected to be announced on Monday, will result in Pfizer's shareholders owning most of the new company, with Mylan's shareholders holding just over 40%, the person said. to be named because plans are not yet public. The Wall Street Journal first reported the news.

The merged company, which will sell EpiPen from Mylan and Pfizer Viagra, will receive a new name and will be domiciled in the United States. The transaction will be structured as a Morris Reverse Trust, with Pfizer's Upjohn business ceded and then combined with Mylan.

The size of the new business is not clear. Mylan has published a business turnover of $ 11.4 billion in 2018 in 2018, but Pfizer does not disclose the figures of its Upjohn unit based in China. Pfizer's core health-related activities, including non-patented drugs, branded generics, sterile injectable drugs, biosimilars, and others, generated $ 20.2 billion of the $ 53.6 billion in total sales of the company in 2018, but Pfizer does not give up its entire unit.

Mylan's stock is down 76% from its 2015 high, due to higher EpiPen prices, US generic price pressure, and a US market investigation. the collusion between the prices of drugs in the industry. The deal is the "best possible result" for Mylan, said Jared Holz, health strategist at Jefferies. Mylan said last year that it formed a strategic review committee to evaluate options for the company's future.

Pfizer investors are more mixed in the market, according to Holz, who said he has received shareholder feedback since the newspaper's first report on Saturday morning,

Under the new CEO, Albert Bourla, the new CEO would strive to streamline Pfizer's focus on branded drugs and vaccines. In December, the company agreed to consolidate its consumer products business, which sells Advil, among other brands, to GlaxoSmithKline in a joint venture in which GSK has a controlling interest. In June, Pfizer announced that it would spend $ 11.4 billion to acquire the anti-cancer drug maker Array BioPharma.

According to Holz, the contract with Mylan could have "dilutive effects on profits in the short term, because of the profitability of Upjohn for Pfizer".

The new company will be headed by Michael Goettler of Pfizer, currently president of the Upjohn business. Mylan President Robert Coury will serve as Executive Chairman, and Mylan CEO Heather Bresch will leave.

Holz called the management reshuffle positive for the deal, noting that Mylan had "one of the most underprivileged management teams in all health care".