The U.S Federal Trade Commission has approved Pfizer’s (NYSE:PFE) plans to sell its Upjohn business that is to merge with Mylan (NASDAQ:MYL). A consent order approved by the agency will result in Pfizer spinning off Upjohn on November 3, which will, in return, merge with the generic drug maker.
Upjohn-Mylan Merger
A merger between Upjohn and Mylan will result in a combined company to be renamed Viatris. Pfizer will own 57% of the combined company, with Mylan owning the remaining 43%. Viatris executive team and board have already been finalized, with Mylan Robert J Coury poised to become the combined company’s executive chairman.
The combined company will boast of a portfolio of more than 1,400 drugs selling in more than 165 countries. When the deal was first announced last year, the companies expected the combined company to generate between $19 billion and $20 billion a year with cash flow of as much as $4 billion.
Upjohn and Mylan’s merger will result in a branded pharmaceutical company focused on making new medicines with higher sales-growth potential. In addition, the branded company will focus on making medicines with higher sales growth potential. The merger is also a big boost for Mylan after a rocky 2020 due to pricing headwinds that have already taken a toll on slim margins.
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FTC Competition Concerns
The deal was initially on the brink of collapse after the FTC raised concern that would harm current and future competition in the generic drug markets if allowed to go through. Initially, there were concerns about the merger impact on hypertension medication. Upjohn owns a portfolio of such medications, with Mylan making generic versions of the brands.
In a bid to secure regulatory approval for the deal, the companies agreed to sell rights to some of the medications to address the FTC concerns. Upjohn decided to divest some of its key products, including Cadet, Dilantin, and Aldzactazide. On its part, Mylan parted company with eplerenone tablets used to treat high blood pressure.
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