Mylan has officially announced they will combine with UpJohn, Pfizer’s off-patent branded and generic established medicines business.
The merged entity is expected to have annual revenue of US$19-$20 billion in 2020.
US-based analysts said while Pfizer's portfolio of off-patent medicine remains profitable it is not key to the company's growth.
Overall, Pfizer reported US$13.3 billion in revenue for the second quarter, up 2 per cent, but UpJohn's revenue fell 11 per cent to US$2.8 billion.
The majority of the merged entity's global revenue mix will be 'branded' generics (56 per cent), followed by generics (34 per cent), over-the-counter medicines (6 per cent) and biologics (4 per cent).
Under the terms of the all-stock agreement, each Mylan share will be converted into one share of the new company. Pfizer shareholders will own 57 per cent of the merged entity and Mylan shareholders 43 per cent.
It represents another deal for Pfizer CEO Albert Bourla who recently announced the US$11.4 billion acquisition of US-based oncology company Array BioPharma.
The deal is further evidence of the technology-driven change impacting the world's largest biopharmaceutical companies. Dr Bourla has focused the business on oncology and emerging technologies and drawn a clear line with the company's legacy brands.
According to Dr Bourla, “We are creating a new champion for global health - one poised to bring world-class medicines to patients across a wide range of therapeutic areas.
"I believe that Mylan’s unique profile and strategy has made it the obvious partner of choice in creating this powerful combination. By bringing Mylan’s growth assets to Upjohn’s growth markets, we will create a financially strong company with true global reach. I’m also excited about the management team, which combines strong executive talent from both companies, whose commitment to improving global health for patients and to delivering returns to shareholders are great assets for the new company.
"For Pfizer, this transaction represents our sharpened focus on innovative medicines and is a testament to our purpose – breakthroughs that change patients’ lives. At the same time, we’ll maintain the financial flexibility to advance our strong pipeline, invest for growth and continue to return capital to our shareholders."