WIKIMEDIA, JERICHOThe pharma feeding frenzy rages on. In what would be the biggest deal in the history of the pharmaceutical industry, Pfizer and Allergan are planning on merging into a single company through a $160-billion-dollar deal. “The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world,” Pfizer CEO Ian Read said in a statement issued today (November 23).
The agreement between the companies—in which Allergan would technically be the buyer—appears more of an attempt to dodge newly minted federal tax rules than a push to ramp up innovation. Allergan’s corporate headquarters is in Dublin, Ireland, and merging with the firm would significantly lower Pfizer’s corporate tax bill. Such moves, called “tax inversions,” became tougher under new rules from the US Treasury Department enacted last week. Pfizer tried a similar strategy last year, but its bid to buy U.K.-based AstraZeneca for $119 billion was unsuccessful.
The deal could also be “a precursor to Pfizer’s eventually being split in two,” one dedicated to brand-name treatments and the other focused on drugs nearing the ends of their patent lives, according to The New York Times.
CNN reported that the new Treasury rules alone were not expected to scuttle the deal.