Pfizer: Merger picture - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Pfizer: Merger picture

Jun 27, 2002

Pfizer Inc. emerged as the world's largest pharma company in early 2000, when it snatched Warner Lambert from the clutches of rival suitor American Home Products (AHP). A US$ 90 bn acquisition of Warner Lambert was the largest ever in the history of global pharma industry. The merged entity now has sales close to US$ 30 bn with highest R&D budget in the pharma industry. With Warner came cholesterol-fighter Lipitor, the drug market's No. 1 seller with $6 bn in annual revenues, apart from other major brands. Following the global merger, Pfizer India also decided to merge Warner Lambert subsidiary, Parke Davis with itself. The company is expected to announce the merger ratio today. We expect the ratio to be 1:3 (i.e. 3 shares of Parke Davis for every share of Pfizer).

Pfizer-Parke Davis - A robust entity
The merged entity in India would have robust financial numbers with sales expected around Rs 6 bn, leading to a position in the list of top five domestic pharma players and a combined market share of 3.2% in the domestic industry.

Rs m Pfizer* Parke Davis** Merged Entity***
Net Sales 3,206 2,134 5,755
Operating Margins (%) 7.2% 14.0% 11.8%
Net Profit 475 250 812
EPS (Rs.) 20.3 20.8 29.5
*- Latest available 12 month results **- Annualised 12 months results
***- Expected numbers for 12 months ending Nov'02
Apart from financial consolidation, the merger with Parke Davis is expected to add significant brands to the company's already impressive product portfolio. Pfizer would inherit brands such as Benadryl, Gelusil and Listerine from Parke Davis.

Particulars Pfizer Parke Davis Merged
ORG Rank 11 23 5
No. of Products 24 54 78
Sales per brand (Rs m) 134 40 74
As shown in the above table, while Pfizer brings on the table a small portfolio of mega brands, Parke Davis, brings a larger portfolio of products. While on one hand, the merger would help Pfizer create a strong hold in the OTC segment; the companyís aggressive marketing field force would have a large product portfolio to push. Pfizerís marketing team is considered to be the best in the industry. Barring Benadryl, there is little overlap in the product profiles of both the companies even in common therapeutic segments. Even after the merger, the sales value per brand for Pfizer is expected to be impressive, which clearly vouches for its strong brand portfolio.

Both Pfizer and Parke Davis have introduced few new products due to weak patent laws and competition in the formulations market in the domestic market. Considering the parentís stand on new product introductions, the situation is not expected to improve. The company now seems to be tackling this by tying-up with local pharmaceutical companies. The tie -up with Shanta Biotech, to market the latterís hepatitis-B vaccine was a unique combination of innovative product and strong marketing. The company is also awaiting other products from the Shanta Biotech stable.

Pfizer- Few but strong brands
Company Ranking in
terms of sales*
No. of
(Rs m)
Aventis 6 55 94
Pfizer 5 78 74
GlaxoSmithKline 1 210 53
Ranbaxy 2 237 35
Nicholas Piramal 4 217 25
Cipla 3 358 21
*- Expected rankings post Pfizer- Parke Davis merger

Equitymaster requests your view! Post a comment on "Pfizer: Merger picture". Click here!


More Views on News

PFIZER Announces Quarterly Results (1QFY21); Net Profit Up 10.3% (Quarterly Result Update)

Aug 26, 2020 | Updated on Aug 26, 2020

For the quarter ended June 2020, PFIZER has posted a net profit of Rs 1 bn (up 10.3% YoY). Sales on the other hand came in at Rs 5 bn (down 5.4% YoY). Read on for a complete analysis of PFIZER's quarterly results.

PFIZER Announces Quarterly Results (3QFY20); Net Profit Up 5.4% (Quarterly Result Update)

Feb 19, 2020 | Updated on Feb 19, 2020

For the quarter ended December 2019, PFIZER has posted a net profit of Rs 1 bn (up 5.4% YoY). Sales on the other hand came in at Rs 5 bn (up 4.7% YoY). Read on for a complete analysis of PFIZER's quarterly results.

PFIZER 2017-18 Annual Report Analysis (Annual Result Update)

Jan 1, 2019 | Updated on Jan 1, 2019

Here's an analysis of the annual report of PFIZER for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of PFIZER. Also includes updates on the valuation of PFIZER.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Sep 25, 2020 (Close)