Dive Brief:
- The $155-$160 billion merger between drug makers Pfizer and Allergan is an almost 30% premium over their consolidated share prices, and will create the world’s largest drugmaker as well as a pharma advertising powerhouse.
- Pfizer alone spent $1.4 billion in measured media last year in the U.S. ranking as the seventh largest advertiser, spending more than Toyota and Verizon.
- As part of the deal Pfizer will relocate its headquarters to Dublin in order to avoid U.S. taxes.
Dive Insight:
The U.S. is one of two countries in the world that allows pharmaceutical companies to advertise drugs directly to consumers.
According to Kantar Media, the top five pharma advertisers in the U.S. spent $2.5 billion on TV, print and online display ads. Online video ads were not part of the spending figure. The combined spending of the newly formed company last year included Pfizer’s $1.4 billion, Allergan’s $267 million and Actavis’ (a company that bought and merged with Allergan in March) $387 million.
About the deal, Ian Read, chairman and CEO of Pfizer, said in a statement, "The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world. Through this combination, Pfizer will have greater financial flexibility."
Read's statement continued: "That will facilitate our continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders, and continued investment in the United States, while also enabling our pursuit of business development opportunities on a more competitive footing within our industry."
Meanwhile, last week the American Medical Association (AMA) voted to call for an end of direct-to-consumer (DTC) advertising of prescription drugs and medical devices, with the intention of helping lower drug prices. The Association for National Advertisers (ANA) expressed its concern for the ban to take hold, saying it would "set the U.S. back decades in terms of the information available to consumers and patients."
So far there is no information on how the deal will impact the new company’s agency relationships.