Pfizer has announced its intention to acquire pain drug maker King Pharmaceuticals for $3.6 billion.
Pfizer and King Pharma have entered into a definitive merger agreement whereby Pfizer will acquire King Pharma for $14.25 per share.

The offer price represents a 40 per cent premium on King Pharma’s closing price as at Oct 11, 2010. The Boards of both companies have approved the deal, which is expected to boost Pfizer’s 2011 and 2012 earnings by 2 cents annually.

The company expects 2013 – 2015 earnings to be boosted by 3_4 cents annually. Pfizer also expects to achieve cost savings of at least $200 million by late 2013.

With several of King Pharma’s products facing slowing prescription trends mainly due to generic competition, analysts believe that Pfizer’s main attraction is towards King Pharma’s pain management portfolio.

“With this acquisition, Pfizer is looking to strengthen its position in the pain management market, which represents a significant commercial opportunity. The addition of King Pharma’s pain products will diversify Pfizer’s product portfolio and bring in additional sources of revenue.”

In the deal Pfizer gains products including the pain drug Avinza and EpiPen, a pre_filled injection designed to quickly treat serious allergic reactions.The deal is Pfizer’s largest since it bought rival Wyeth for $68 billion in 2009. That deal closed last October.