Drugmakers Pfizer, Allergan considering a combination: WSJ

By Natalie Grover

(Reuters) – Drugmakers Pfizer Inc and Allergan Plc are considering combining in what could be the biggest merger in the healthcare industry in already busy year, the Wall Street Journal said on Wednesday.

Pfizer recently approached Botox-maker Allergan about a deal, the Journal said, citing people familiar with the matter.

The process is in its early stages, and may not yield an agreement, while other details of the talks are unclear, the report said.

Reuters was not immediately able to confirm the report.

The healthcare sector has seen an unprecedented wave of deals since early 2014, from large drugmakers buying up smaller rivals, to consolidation among makers of generic medicines and tie-ups between insurers.

Pfizer, which has a market value of about $219 billion, has already played a part in the recent deal frenzy, having last month paid $15 billion to acquire U.S. rival Hospira Inc.

The U.S.-based company was not immediately available for comment.

Ireland-based Allergan, which declined to comment, has a market capitalization of about $113 billion. The company became the third-largest generic drugmaker in the United States after combining with Actavis in March.

Both Pfizer and Allergan’s shares were little changed after the bell on Wednesday.

New York-based Pfizer, known for such medicines as Lipitor and Viagra, went after a much bigger target last year when it unsuccessfully pursued a $118 billion combination with Anglo-Swedish pharmaceuticals group AstraZeneca Plc .

That deal would have allowed Pfizer to lower its tax bill by moving its headquarters to England. A takeover of Dublin-based Allergan could have similar advantages for Pfizer, the Wall Street Journal reported.

“When you’re the size of Pfizer, an acquisition like this may be the only choice you have in order to be able to move the needle for sequential growth…so the question now becomes, if not this, what, and if not now, when?” said WBB Securities’ analyst Stephen Brozak.

Allergan would give Pfizer, whose revenues are expected to slide 3.3 percent this year, a boost in top-line growth. The Botox-maker’s revenue is seen increasing 39 percent this year, according to Thomson Reuters I/B/E/S estimates, although much of that growth is thanks to the Actavis deal.

Following the Actavis tie-up, Allergan sold its generic drugs business to Israel’s Teva Pharmaceutical Industries in July for $40.5 billion in cash and stock.

(Reporting by Natalie Grover in Bengaluru; Writing by Christian Plumb; Editing by Lisa Shumaker)

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