On Monday, Pfizer announced that it is planning to combine its generic drugs business Upjohn with Mylan. It is estimated that the combined entity could generate sales of more than $20 billion by 2020. Pfizer will be holding a 57% stake in the new venture, while Mylan will be holding the rest.
The blockbuster drug Viagra manufacturer changed its segment reporting structure in 2019. It reports revenues under three segments – Biopharma, Upjohn, and Consumer Healthcare.
- Biopharma: It includes all of its previous Innovative Health business units, except Consumer Healthcare, its new Hospital business, and Pfizer CentreOne (contract manufacturing operation of Pfizer). It also includes Pfizer’s biosimilar portfolio, which is merged with Oncology and Inflammation & Immunology business units.
- Upjohn: This segment includes branded and generic drugs business.
- Pfizer’s Consumer Healthcare: It will merge with GSK’s consumer healthcare business to form a new company, with Pfizer owning a 32% stake.
The revenues of Upjohn of $3.0 billion in the first quarter of 2019 accounted for 23% total sales and $2.8 billion in the second quarter of 2019 accounted for 21% of the total sales.
Lipitor and Lyrica have been the two key drugs under Upjohn, which jointly accounted for more than 50% of the revenues.
However, Lyrica, which brought sales of $5 billion in 2018, has been nearing its loss of marketing exclusivity, expecting a sharp decline in sales with its generic version.
As mentioned earlier, the combined sales of Pfizer’s Upjohn and Mylan is expected to around $20 billion in 2020. However, the contribution of Upjohn could be lower given the expected trends in Lyrica sales. Taking Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) into consideration, the combined entity could earn up to $8 billion. Upjohn could generate nearly $4 billion, while Mylan nearly $3.7 billion in EBITDA in 2020.
