Warner-Lambert to Challenge Lipitor Co-Marketing Agreement with Pfizer

Strategic Insights -

Warner-Lambert is gearing up to file a lawsuit to terminate its co-marketing agreement with Pfizer for the blockbuster anti-cholesterol drug Lipitor, amidst a high-stakes battle over Pfizer's unsolicited $72 billion bid. The move, which could see Warner-Lambert regain total control of Lipitor, has been deemed a high-risk strategy by analysts who warn it threatens future earnings. The company's board is set to meet tomorrow to discuss the matter, and if a decision is not made before the US Thanksgiving break, it is likely to come soon.

Key Takeaways:

  • Warner-Lambert's lawyers are drawing up plans to file a lawsuit to cancel the Lipitor co-marketing agreement with Pfizer, which could see the company regain total control of the drug.
  • The lawsuit would be filed on the grounds that Pfizer's actions have already breached the deal and the standstill agreement preventing Pfizer from making a merger approach.
  • Lipitor is a highly lucrative product, with annual sales exceeding $4 billion and projected to reach $10 billion in the next few years.
  • The move is considered high-risk and could threaten future earnings, according to analysts.
  • Warner-Lambert would argue that the market for Lipitor is already made and awareness among physicians is very high, reducing the need for continued co-marketing.
  • A preliminary ruling on the case is not expected for at least two months, coinciding with the January 24 hearing in Delaware of Pfizer's challenge to a merger agreement struck between Warner and American Home Products.

Statistics:

  • Lipitor annual sales: over $4 billion
  • Projected Lipitor sales: $10 billion in the next few years
  • Value of Pfizer's bid for Warner-Lambert: $72 billion
  • Timeframe for preliminary ruling on lawsuit: at least two months from filing

Sources:

  • "Warner-Lambert Mulls Lawsuit to Scrap Pfizer Deal" by Reuters (no date mentioned)