How Big Is Pfizer’s Generic Drugs Business That It Plans To Merge With Mylan?

Pfizer (NYSE:PFE) today announced its plan to combine its generic drugs business with Mylan in a Reverse Morris Trust transaction. The combined entity could generate sales of over $20 billion by 2020, and Pfizer will hold a 57% stake in the new company, with Mylan holding the rest. In this note we take a look at the Pfizer’s generic drugs business, and revenue and EBITDA forecasts for the combined entity, as guided by the company. You can view our interactive dashboard analysis ~ How Big Is Pfizer’s Generic Drugs Business That It Plans To Merge With Mylan? ~ for more details.  In addition, you can see more of our data for Healthcare companies here.

Upjohn Is Pfizer’s Generic Drugs Business

• Pfizer changed its segment reporting structure in 2019. The company now reports revenues under three segments ~ Biopharma, Upjohn, and Consumer Healthcare.
• Biopharma includes all of the previous Innovative Health business units (except Consumer Healthcare), as well as a new Hospital business, and Pfizer CentreOne (Pfizer’s contract manufacturing operation). The segment also includes Pfizer’s biosimilar portfolio (merged with Oncology and Inflammation & Immunology business units).
• Upjohn includes branded and the generic established medicines business.
• Pfizer’s Consumer Healthcare business will be merged with GSK’s consumer healthcare business to form a new company, with Pfizer owning a 32% stake.
• Upjohn’s revenues of $3.0 billion in Q1 2019, and $2.8 billion in Q2 2019 accounted for 23% and 21% of the company’s total sales in the respective quarters.

Lyrica And Lipitor Are The Two Key Drugs Under Upjohn, And They Jointly Account For Over 50% of The Segment Revenues

• Upjohn Revenue Breakup:
  •  Lyrica 38.6%
  • Lipitor 20.2%
  • Norvasc 9.8%
  • Celebrex 5.7%
  • Viagra 4.7%
  • Effexor 2.5%
  • Zoloft 2.2%
  • Xalatan 2.0%
  • Others 14.3%

Combined Sales of Upjohn & Mylan Could Be Around $20 Billion In 2020

• Pfizer’s Upjohn and Mylan’s combined sales could be around $20 billion in 2020.
• However, Upjohn’s contribution is expected to be lower given the expected trends in Lyrica sales.
• Lyrica, a drug used for the treatment of neuropathic pain, post-herpetic neuralgia, fibromyalgia, diabetic peripheral neuropathy, and epilepsy, garnered close to $5 billion in sales in 2018.
• Lyrica lost its marketing exclusivity in June 2019, and it will face biosimilar competition, which will result in a significant dip in sales going forward.

The Combined Entity Could Garner $8 Billion In EBITDA In 2020

• Mylan could generate close to $3.7 billion, while Upjohn could generate around $4.0 billion in EBITDA in 2020.
• Synergies could be $250 million, as highlighted in the company’s presentation.
• This would result in total EBITDA for the joint entity to be $8.0 billion or 40% of the total expected sales.

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