FTC Approves Pfizer Merger

Tuesday, June 20th 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — Federal regulators have approved a merger that will leave one company dominating many U.S. medicine cabinets.

The $90 billion merger of Pfizer Inc. and Warner-Lambert Co., approved Monday by the Federal Trade Commission, will put many of the world's best-known over-the-counter brands under one company name.

In addition to Halls, Benadryl, Sudafed, Listerine, Schick, Visine, Ben Gay, Lubriderm, Zantac and Cortizone, the company also will make two of the hottest-selling prescription drugs, the male impotence drug Viagra and the cholesterol-lowering medicine Lipitor.

The deal is expected to make the new Pfizer the largest pharmaceutical company in the world.

``This is a defining moment for Pfizer,'' said William C. Steere Jr., Pfizer chairman and chief executive officer. ``Combining the two fastest-growing companies in the industry creates a global leader in the discovery of health and consumer products that will benefit millions around the world.''

However, the FTC agreed to the merger after the companies consented to divest themselves of some businesses that federal regulators believed might otherwise constitute a monopoly. The FTC order says the companies must divest in four areas — treatments for depression, Alzheimer's, cancer and lice, including Pfizer's well-known head-lice drug RID.

The watchdog group Public Citizen was disappointed by the FTC decision, saying the companies are amassing ``unprecedented political power in Washington'' while offering no guarantees that patients will save money on drugs or that the combined company will engage in more drug research.

``There's really not a shred of evidence that the public is getting a price break out of the economies of scale,'' said Sidney Wolfe, a physician and director of Public Citizen's health research group. ``This sounds great if you're a stockholder but not if you're a patient.''

Pfizer and Warner-Lambert first announced they intended to merge Feb. 6. But shortly thereafter, the FTC filed a complaint to investigate whether the corporate marriage would lessen or eliminate competition.

The commission voted unanimously in favor of the proposed consent agreement but the commissioners will accept public comment on the proposal until July 19. The agency is expected to make the agreement final after that.

``Competition in pharmaceutical markets encourages lower prices and spurs innovation for drugs that continue to improve the health of the American public,'' said Richard G. Parker, director of the FTC's bureau of competition. ``The commission's order preserves competition for several very important drugs that treat diseases suffered by millions of Americans annually — head lice in children, depression, Alzheimer's and cancer.''

Under the merger, Pfizer is exchanging 2.75 shares of Pfizer common stock for each share of Warner-Lambert common stock in a tax-free transaction.

Last year, Pfizer had profits of $3.38 billion, or 87 cents per share, on sales of $16.2 billion. Warner-Lambert's earnings for the year were $1.73 billion, or $1.96 a share, on sales of $12.93 billion. Pfizer stock, which fell 87.5 cents Monday, was down an additional 78.1 cents Tuesday morning on the New York Stock Exchange at $46.188 a share. Warner-Lambert ended its final day of trading Monday at $129.75, down $1.25.

Pfizer said it did not expect the divestitures to have much effect on the current or future performance of the company. Company officials also said they expect to realize at least $1.6 billion in merger-related cost-savings by 2002.