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St. Louis-based Monsanto Co., and Pharmacia & Upjohn, Peapack, NJ, announced plans to merge.
St. Louis-based Monsanto Co., and Pharmacia & Upjohn, Peapack, NJ, announced plans to merge into an as-yet-unnamed company with a projected annual pharmaceutical research and development budget of more than $2 billion and a combined U.S. sales force of 3,800.
The combined company will have a strengthened position in the North American pharmaceutical market with a U.S. sales force that is expected to account for more than 50% of the company's global pharmaceutical sales.
Leading the new organization as president and chief executive officer will be Fred Hassan, the current CEO of Pharmacia & Upjohn. Hassan will also have operational responsibility for the new company's core pharmaceutical business. Monsanto Chairman and CEO Robert Shapiro will become the non-executive chairman for a period of 18 months, after which he will be succeeded by Hassan.
"The new company has a strong management structure," said Shapiro, commenting on the merger-of-equals transaction. "Fred Hassan is a proven CEO, and I'm confident he will bring the same dynamism and focus on shareholder value to the new company that he brought to Pharmacia & Upjohn."
According to Hassan, the merger will provide the companies with both present and future opportunities. "This is a combination designed to achieve both business growth and enhanced shareholder value over the near and long term," he said. "We are creating a high-growth pharmaceutical company with a global leadership in sales and marketing, a superior [research and development] platform and top-tier growth prospect, including several products with blockbuster potential."
The arthritis medication Celebrex would spearhead the company's pharmaceutical business. Celebrex was launched in 1999 and has sales to date of $1.4 billion. Monsanto's pharmaceutical division, Searle, copromotes Celebrex with New York-based Pfizer Inc. - a partnership that Pfizer said will remain intact despite Pfizer's recent struggles with its other copromotion partner, Warner-Lambert. (See p. 14.)
Investors on Wall Street reacted negatively to news of the merger. Shares of Monsanto fell 12% and shares of Pharmacia & Upjohn dropped 6.5% the day after the merger was reported.
Countering investor skepticism, New York-based industry analysts Datamonitor said the merger should benefit both companies. "It will be of great benefit to Pharmacia & Upjohn to merge its pharmaceuticals division with Monsanto's pharmaceuticals division," Datamonitor stated.
According to Datamonitor, Monsanto's anticipated strong sales growth will help the revenue growth of the combined company, while at the same time, compatibility between the two company's portfolios will provide significant cost savings.
In addition, Datamonitor said, Pharmacia & Upjohn's global strength would create a combined company that is less U.S.-focused than Monsanto alone. This diversification would increase Monsanto's global presence and add to its revenue stream.
The new company's corporate headquarters, including the pharmaceutical division, will be located in Peapack, NJ. The agriculture division will establish its headquarters in St. Louis. PR