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Pfizer acquires pain drugmaker King Pharma. Pfizer Inc.

Pfizer Acquires Pain Drugmaker King Pharma. Pfizer Inc. (New York) agreed to pay $3.6 billion in cash to buy King Pharmaceuticals Inc. (Bristol TN), expanding its range of pain treatments to include tamper-resistant medicines. Pfizer, the world's largest drugmaker, will pay $14.25 a share, a premium of 40% over King's closing share price prior to news of the deal. Pfizer's purchase of King adds the morphine pill Embeda and two other tamper-resistant painkillers turned away once by U.S. regulators. The companies expect the deal to close by the first quarter of 2011. Pfizer is seeking new products before its top-selling cholesterol pill Lipitor, with $11.4 billion in 2009 sales, loses revenue to generic competition next year. Pfizer sold more than $5 billion in painkillers in 2009 led by Celebrex for arthritis and Lyrica for nerve pain. "Pfizer is looking to expand into pain to buffer the fall from the Lipitor precipice," said Corey Davis, an analyst at Jefferies & Co. in New York. "I wouldn't have predicted this deal, but I can see where it makes sense given the predicament Pfizer is in." The acquisition would be Pfizer's biggest since its $68 billion purchase of Wyeth last year. The company has done 30 deals in the past five years with an average size of $4.13 billion. The average premium paid for pharmaceutical acquisitions over the past 12 months was 24%, according to data compiled by Bloomberg.

Prior to news of the deal, King's shares had declined 17% since Jan. 1 as the company faced competition from generic copies of the muscle relaxant Skelaxin, its top-seller last year. King hasn't closed at $14.25 since September 2007, according to data compiled by Bloomberg. King has been focused on making new painkillers since its top-selling blood-pressure pill Altace went generic in 2007. The company acquired Alpharma Inc. the following year for about $1.3 billion to gain rights to Embeda, which was approved by the U.S. Food and Drug Administration in August 2009. King is also developing Remoxy, a long-acting oxycodone capsule with tamper-resistant features, with Pain Therapeutics Inc. (San Mateo CA). The drug is designed to be a safer alternative to OxyContin, made Purdue Pharma LP (Stamford CT). King has said it plans to re-file Remoxy to the FDA before the end of the year. The drug was delayed in December 2008 when the agency asked for more data.

King shares closed the week up $3.85, or 36%, at $14.16. Pfizer rose 29 cents, or 2%, to $17.75.
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Title Annotation:TOP STORIES
Publication:MondayMorning
Date:Oct 18, 2010
Words:425
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