Pfizer plans a $68 billion purchase of rival Wyeth in diversification move

TRENTON, N.J. - Pfizer Inc., the world's largest drugmaker, said Monday it is buying rival Wyeth for $68 billion in a deal that will quickly boost Pfizer's revenue and diversification and -- if it works as advertised -- help the company become more nimble.

The deal came as New York-based Pfizer set out a full house of issues: a 90 percent drop in income, a hefty charge to end an investigation, a severe cut in its dividend, a dramatically low profit forecast for 2009 and 8,000 job cuts starting immediately.

That's all on top of the colossal problem triggering this deal: the expected loss of $13 billion a year in revenue for cholesterol fighter Lipitor starting in November 2011, when it gets generic competition.

Pfizer also plans to cut about 8,190 jobs by 2011 -- 10 percent of its workforce -- as part of what it expects will be a staff reduction totaling 15 percent of the combined companies' workers -- implying a total job loss of almost 20,000.

By buying Wyeth, Pfizer will mutate from a maker of blockbuster pills to a one-stop shop for vaccines, biotech drugs, traditional pills and nonprescription products for both people and animals.

But plenty of pharmaceutical industry mergers have not lived up to their initial promise, including the deals that enabled Pfizer to leapfrog to the top of the industry -- buying Warner-Lambert in 2000 and, in 2003, Pharmacia Corp.

The cash-and-stock deal, one of the industry's biggest ever, is expected to close late in the third quarter or in the fourth quarter. It comes as Pfizer's 2007 fourth-quarter profit was hit from a $2.3 billion legal settlement over allegations it marketed pain reliever Bextra and possibly other products for indications that had not been approved.

"In one single transaction, the combination with Wyeth advances every single one of [our] strategies," Pfizer Chief Executive Jeff Kindler said during a news conference.

Those goals include increasing sales in emerging markets, enhancing the ability to treat specific diseases, such as Alzheimer's, and becoming a top player in vaccines and biologic drugs, which are made from living cells.

Pfizer, also known for the impotence pill Viagra, said it will pay $50.19 per share for Madison, N.J.-based Wyeth.

Pfizer shares closed down $1.80, or 10.3 percent, to $15.65 Monday. Wyeth shares ended 35 cents lower at $43.39.