Blockbuster Pfizer-Wyeth deal stirs veterinary medicine
Merger muddies outlook for Fort Dodge Animal Health
February 9, 2009 (published)
As Pfizer’s $68-billion buyout of Wyeth creates the world’s largest animal health company, questions emerge about the future of Fort Dodge Animal Health and the long-term effect such a union will have on the products and drugs tied to the venture.
Fort Dodge, a Wyeth subsidiary headquartered in Overland Park, Kan., competes directly with Connecticut-based Pfizer Animal Health for market share of pharmaceuticals used by veterinarians. With the acquisition far from finalized, it’s unclear what the pending deal might mean for veterinary medicine. The two companies compete on a variety of drugs and vaccines, including Pfizer’s nonsteroidal anti-inflammatory Rimadyl, which goes head-to-head with Fort Dodge’s EtoGesic. Pfizer’s Revolution rivals Fort Dodge’s ProHeart and ProMeris in terms of parasite killers and preventatives.
Representatives from both companies did not return VIN News Service media requests.
Ron Brakke, president of Brakke Consulting Inc., says his company drilled down the numbers to estimate the union’s assets, but “too many variables” bar him from publicly sharing the analysis, much of which will likely be revealed during the company’s invitation-only meeting at this month’s Western Veterinary Conference in Las Vegas.
“Obviously this is a big deal,” says Brakke, who has performed due diligence work on other pharmaceutical industry mergers, including Schering Plough Animal Health’s recent buyout of Intervet. “But should veterinarians be worried? Nah. Something like this takes forever, and will all be hashed out by the FTC in the end.”
What Brakke alludes to is the Federal Trade Commission (FTC) Bureau of Competition’s role in approving the Pfizer-Wyeth union on the basis of consumer protection — a review that officials from both companies expect to be finalized near the end of this year. The Bureau, according to FTC’s Web site, reviews mergers and acquisitions and challenges those that could lead to higher prices, fewer choices and less innovation. It’s possible, Brakke says, that FTC officials will demand the sale of Fort Dodge as a condition of the buyout and will be bought by another company or become a stand-alone division.
“It’s not very likely that Fort Dodge will be allowed to remain with Pfizer. Somebody will pick them up,” Brakke predicts.
The alternative has stakeholders wondering what will happen to the 1,000-plus jobs tied to Fort Dodge with Pfizer Animal Health set to swallow the division. As news of the merger aired, Pfizer revealed plans to lay off 8,000 employees, or 10 percent of its workforce, and expects to impose a 15-percent staff reduction of both companies, which translates to almost 20,000 positions.
Earlier in January, Fort Dodge scrapped plans to build a $40-million research and development facility, blaming its decision on the current economic recession.
What’s the bottom line for veterinary medicine? Possibly fewer products, predicts Dr. Robert Gordon, a practice owner in Oakland, N.J., who argues that discontinuing some drugs might not be a bad thing.
“Sure, this merger will impact the pharmaceutical industry, and to some degree, veterinary medicine,” he says. “But I’m not concerned that products will go away. There are so many products that fill similar needs that I don’t think the marketplace will miss one.
“Honestly, I think veterinarians are more worried about meeting payroll in this economy. They’re not spending a lot of time or energy worrying about what Pfizer is doing.”
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