Tags: US | DEM | 2016 | Pfizer | Allergen

Clinton, Sanders Oppose Pfizer-Allergen Deal

Image: Clinton, Sanders Oppose Pfizer-Allergen Deal
 

Monday, 23 Nov 2015 02:35 PM

Hillary Rodham Clinton and Bernie Sanders are bashing plans by Pfizer and Allergen to join together in a $160 billion deal that will create the world's largest drugmaker.

The merger is a so-called inversion, in which U.S. companies looking to lower their tax bills combine with a company in a country with a lower tax rate. That merger potentially saves the U.S. company millions in U.S. taxes.

Clinton says that will leave "U.S. taxpayers holding the bag" and plans to propose steps to prevent inversions.

Sanders says the merger would be a "disaster" for U.S. consumers paying high prescription drug costs. He says the Obama administration should exercise its authority to stop the merger. Martin O'Malley calls the merger "fundamentally unfair."

Several U.S. drugmakers have performed inversions in recent years.

Pfizer, based in New York, makes medications including Viagra, pain drug Lyrica and the Prevnar pneumococcal vaccine, and Allergan produces Botox and the Alzheimer’s drug Namenda. Together, barring any divestitures, the companies will be the biggest pharmaceutical company by annual sales, with about $60 billion.

The deal will be unprecedented on many levels. It’s the largest acquisition so far this year. It’s the largest ever in the pharmaceutical world, eclipsing Pfizer’s purchase of Warner- Lambert Co. in 2000 for $116 billion. And if the new company is able to establish itself abroad for a lower tax rate, a controversial process called an inversion, it will be the largest such move in history.

The U.S. Treasury Department has increasingly targeted such strategies, most recently announcing new guidance on how it will value assets owned by U.S. companies that undertake inversions. The U.S. has the highest tax rate for businesses in the world, at 35 percent, and is one of the only countries to tax corporate profits wherever they are earned. Previous moves by the U.S. Treasury have derailed other proposed inversions, including AbbVie Inc.’s plan to buy Ireland’s Shire Plc for an estimated $52 billion. Pfizer and Allergan’s deal appears structured to avoid the tax inversion rules.

Read has already reached out to lawmakers in both houses of Congress, including Senate Majority Leader Mitch McConnell, and is calling the White House Monday, according to a person with knowledge of the matter. His pitch is that that the deal will help the companies invest in more innovative drugs and that Pfizer Plc would have 40,000 U.S. employees at the close of the transaction.

An agreement may also facilitate the widely discussed potential for Pfizer to reconfigure itself by splitting the newly enlarged company into two: one focused on new drug development, the other on selling older medications. Pfizer said Monday it will decide on a potential separation by the end of 2018.

Pfizer earlier this year bought Hospira Inc., the maker of generic drugs often administered in hospitals, in a transaction valued at about $17 billion. The deal bolstered Pfizer’s established-drugs business, which combines strong cash flow and slow growth.

Allergan itself has been recently transformed, created through an acquisition by Actavis Plc that kept the Allergan name. The company agreed to sell its generics business to Israel’s Teva Pharmaceutical Industries Ltd. for about $40.5 billion and has been on a buying binge of its own. It now has more than 70 compounds in mid-to late-stage development.
 

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Hillary Rodham Clinton and Bernie Sanders are bashing plans by Pfizer and Allergen to join together in a $160 billion deal that will create the world's largest drugmaker.
US, DEM, 2016, Pfizer, Allergen
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2015-35-23
Monday, 23 Nov 2015 02:35 PM
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