Will The Third Acquisition Be The Charm? Pfizer's Integration of Wyeth
Keywords:
Pfizer, acquisitions, new blockbuster drugs, common stock, Exxon Mobil, BM common stockAbstract
After enduring criticism for five years about its inefficient hoarding of cash, Pfizer acted in early 2009 to dispose of the cash in an acquisition of Wyeth. The $68 billion price tag showed the continuing daring attitude of Pfizer management. In 2000 and 2003 Pfizer spent $170 billion in acquiring Warner Lambert and Pharmacia. While Pfizer obtained immediate benefits from the two huge acquisitions, the firms labs spent more time consolidating than producing new drugs. It appeared that Pfizer's labs were losing their ability to develop new blockbuster drugs, and that Pfizer had
to obtain new drugs through acquisitions.
The case requires the consideration of an alternative strategy of acquiring small biotech firms rather than Wyeth. The firms practices of using cash to pay dividends and to purchase After enduring criticism for five years about its inefficient hoarding of cash, Pfizer acted in early 2009 to dispose of the cash in an acquisition of Wyeth. The $68 billion price tag showed the continuing daring attitude of Pfizer management. In 2000 and 2003 Pfizer spent $170 billion in acquiring Warner Lambert and Pharmacia. While Pfizer obtained immediate benefits from the two huge acquisitions, the firms labs
spent more time consolidating than producing new drugs. It appeared that Pfizer's labs were losing their ability to develop new blockbuster drugs, and that Pfizer had to obtain new drugs through acquisitions.
The case requires the consideration of an alternative strategy of acquiring small bio tech firms rather than Wyeth. The firms practices of using cash to pay dividends and to purchase Pfizer common stock are examined and compared to dissimilar practices at Exxon Mobil and IBM common stock are examined and compared to dissimilar practices at Exxon Mobil and IBM
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