in the Eyes Of VCs, Saunders would be the “Pfizergan” Man
There’s loads of speculation whether or not Allergan CEO Brent Saunders will change into CEO of Pfizer—and the way speedy—when the two companies consummate their $ one hundred sixty billion tax-inversion merger, which they hope to consummate later this year.
however at an early morning breakfast assembly at the J.P. Morgan Healthcare conference in San Francisco Tuesday, Saunders left little doubt within the minds of biotech project capitalists that the mixed “Pfizergan” would proceed to be a rich supply of exit cash for those having a look to promote small corporations.
Saunders, carrying a well-trimmed beard and red tie, and different Allergan executives stepped the gathered VCs—roughly two dozen in all from the various box’s top firms—via Allergan’s pre-merger pipeline. The presentation left many in attendance certain that Saunders would sooner than later be tabbed as Pfizer’s high man, and that may gas the combined firm’s starvation for products that aren’t too a long way from marketing approval.
Now a $ 118 billion firm—its valuation has fluctuated because the merger was announced in November—Allergan has collected more than 70 mid- to late-stage experimental merchandise via a series of acquisitions. a few of these deals had been huge on their very own, just like the $ 70 billion aggregate of Allergan and Actavis accomplished in 2015. The pending tie-up with Pfizer hasn’t stopped the Allergan acquisition computing device, both. last week, it nabbed the biotech Anterios for $ ninety million upfront.
Saunders instructed the gathering that he and Pfizer CEO Ian learn speak every day, and that the blended company would continue to seem to VCs “to sustain our innovation,” even fretting that the sharp political rhetoric dogging the drug industry at the present time would dissuade mission investments and skinny the herd of attainable acquisitions in years yet to come.
He also stressed that the mixed firm, with a view to maintain the Pfizer title, would continue to do its personal internal research. How a lot has been another topic of speculation, and the manager teams of Pfizer and Allergan addressed that query later Tuesday in a joint appearance at the convention.
David Nicholson, who runs R&D for Allergan’s model-title products, encouraged the VCs in attendance to carry him acquisition opportunities in girls’s health, eye illness, gastrointestinal disease and different areas. For GI problems, he singled out the microbiome as a local of interest. “when you’ve got companies with products or initiatives, let me know about it,” he mentioned.
One VC showed me a list of his portfolio firms jotted on a napkin all through the breakfast that, off the highest of his head, would match into Allergan’s acquisition needs. there were eight.
The VCs I spoke with upon condition of anonymity stated they were guaranteed that Allergan’s acquisitiveness would stay at the core of the new firm. One pointed out that a Pfizer with various Allergan in its DNA can be hungry for products in evolved development in sure areas, however VCs taking a look to promote property that had no longer reached or had recently reached medical trials would possibly not find as much passion.
partially, their belief used to be bolstered by using what they heard as a signal from Saunders himself that he would not directly be in charge.
What Saunders actually stated, based on a question about reconciling the difference between Allergan’s purchase-first way and Pfizer’s analysis-heavy trade, used to be this: “When this deal closes most of Pfizer will report to me.”
officially, Saunders will likely be second in command, the president and COO, and Pfizer CEO Ian read will keep on in that position. When requested instantly by CNBC reporter Meg Tirrell in November if Saunders often is the subsequent CEO, read dodged the query:
“I’m very, very looking ahead to working with Brent. He’s performed a wonderful job with Allergan and the entire corporations he’s been in. We’ll have a super partnership. together we’ll be very a hit.”
however former Pfizer head of world R&D John LaMattina, now a director at Boston’s PureTech and a Forbes columnist, wrote in November that the deal wouldn’t occur and not using a promise that Saunders would transform CEO. And Bloomberg business stated around the related time not simplest that Saunders can be CEO, but the firm put up-merger can be split in two.
whether the stories hang authentic, Saunders used to be adamant on the breakfast that the mixed company would no longer undergo the identical value slicing—and job losses—that Pfizer’s previous megamergers have engendered.
“It’s now not about cost-chopping,” he advised Xconomy. “if truth be told the biggest criticism we get from traders is that the synergies”—the savings from combining two corporations—“aren’t as big as they idea they would be.”
the companies are aiming to chop $ 2 billion over three years, not up to 10 p.c of the blended “value base” of the companies, Saunders mentioned. He namely talked about the “normal overlap” of headquarters, regional workplaces, human resources, and finance groups as candidates for cuts. He didn’t mention explicit research or product areas.
A drug business megamerger without large reductions in core areas can be highly strange. Saunders agreed but stated this time it’s different. “you may have two administration teams that have accomplished plenty of deals and integrations. We’ve done a lot of excellent issues and made some mistakes as smartly, and we are dedicated to doing this one otherwise than we’ve got in the past.”
Xconomy
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