Pfizer Inc. (PFE) recently completed its acquisition of Synbiotics Corp. for an undisclosed amount. With the closing of this deal, Synbiotics will become a part of Pfizer’s Animal Health unit.
Synbiotics specializes in the manufacturing of immunodiagnostic tests for animals. The acquisition will help boost Pfizer’s Animal Health portfolio and will also help Pfizer achieve its aim of becoming a comprehensive solutions provider in the animal health industry.
Pfizer already has an innovative portfolio of vaccines and medicines, which with the acquisition of Synbiotics’ animal health diagnostics, will help veterinarians provide utmost care to companion animals and livestock. Veterinary immunodiagnostics is aimed at detecting viruses or bacteria in animals and is a fast growing sector. It is estimated that the global immunodiagnostics market is worth $735 million.
Synbiotics’ shareholders are expected to receive about 30.6 cents per share in cash under the deal.
Meanwhile, Pfizer remains on track to complete its acquisition of King Pharmaceuticals (KG) early this year.
Neutral on Pfizer
We currently have a ‘Neutral’ recommendation on Pfizer, which is supported by a Zacks #3 Rank (short-term “Hold” recommendation). While the Wyeth takeover brought with it an attractive biologics platform and some complementary products and businesses, we do not believe they are enough to sustain long-term top line growth.
The Lipitor patent expiration in 2011 remains a big concern. Lipitor contributed almost 23% to the top-line in 2009 with sales coming in at $11.4 billion. The entry of generic versions of the product will have a significant impact on the company’s financials. The loss of patent exclusivity over the coming years will make it challenging for the company to drive top line growth.
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