Pfizer buying Hospira for about $15 billion

BENGALURU: Drugmaker Pfizer Inc said it would buy Hospira Inc for about $15 billion to gain access to biosimilars, copies of biotech drugs made from living cells.

Pfizer's offer of $90 per share represents a premium of 39% to Hospira stock's close on Wednesday. Hospira was trading at $88 before the bell, while Pfizer was up 1.7 %. Drugmakers are racing to develop biosimilars, which typically cost 20-30 percent less than the original, as big-ticket patents on biotech drugs expire and cashstrapped healthcare systems look to cut costs. Biosimilars are expected to account for about a quarter of the $100 billion in sales stemming from off-patent biological drugs by end of decade, according to a study compiled by Thomson Reuters BioWorld.

Hospira is seeking approval from the US Food and Drug Administration to market a copy of Johnson & Johnson's blockbuster arthritis treatment Remicade.

Total enterprise value of the deal is about $17 billion, the companies said. Hospira had $1.75 billion of outstanding long-term debt as of Sept. 30, according to a regulatory filing.

The deal is expected to add 10-12 cents per share to Pfizer's earnings in the first full-year after the deal closes. Pfizer's financial advisers are Guggenheim Securities, JP Morgan and Lazard, with Ropes & Gray LLP serving as legal adviser and Clifford Chance also advising.