"Pfizer-Pharmacia," a behemoth is born, but does the market like it?

Pfizer's announcement of its intended $60 billion all-paper takeover ofPharmacia may have been agreed with the latter (see page 3), but it caused Pfizer's share price to slump to a four-year low, and reduced the value of the deal to nearer $53 billion, clearly indicating that it was not universally well-received by investors.

News of the deal also resulted in sharp share price falls for other drugmakers, on concerns that they too might jump on the merger bandwagon, along with worries on the marketing strength the combined company will have in some key therapeutic sectors. The new group's share of the world pharmaceutical market will only increase from an estimated 8% to 11%, with turnover in excess of $48 billion, with more than $25 billion in the USA, where it will have a sales force of over 12,000.

Analysts at Julius Baer believe the new firm's strength could make launches of AstraZeneca's cholesterol-lowerer Crestor (rosuvastatin), Bayer/GlaxoSmithKline's erectile dysfunction drug Nuviva (vardenafil) and Novartis' COX-2 inhibitor Prexige (lumiracoxib/COX 189) more difficult.