Biggest pharma merger in talks

After a year of mergers, the biggest one yet is now on the cards as pharmaceutical giant Pfizer has entered into talks with Dublin-based Allergan – a firm specialising in dermatology, aesthetics and generic products.

Details of the deal have not yet been revealed, nor has an agreement been reached, states Allergan on its website. One particular hurdle that must be overcome during negotiations is the price of the transaction in a market in which share prices are falling for rival companies. The composition of the combined company and possible lay-offs at Allergan is also due to be discussed.

News of the talks has ignited a debate regarding tax inversions

News of the talks has ignited a debate regarding tax inversions, as the deal would enable Pfizer to take advantage of lower taxes in Ireland. As such, Pfizer is facing increasing pressure back home in the US, as presidential candidates target firms accused of relocating in order to pay fewer taxes domestically, as well as those charging high prices for prescription medicine.

“Clinton is committed to cracking down on so-called ‘inversions,’ where a company chooses to leave the US on paper to game the tax system, and believes we should reform our tax code to encourage investment in the US, rather than shipping earnings and jobs overseas,” said spokesperson Ian Sams, according to Reuters.

The possible merger comes after months of Pfizer’s $16bn acquisition of Hospira, in a bid to expand its portfolio of patent protected products. Now with the possible Allergan merger, Pfizer would also add the famous anti-wrinkle treatment, Botox, and Restasis, a dry eye treatment, to its range – the two alone earn $3.7bn in annual sales.

The combined company would have a market share of around $330bn, far exceeding the current global market leader, Johnson & Johnson by over £50bn, and will make up around a third of the total market worldwide.