Warner-Lambert Price Linked to Lipitor Deal

MORRIS PLAINS, N.J. — American Home Products Corp. will consider offering more of its shares for Warner-Lambert Co. if Warner-Lambert succeeds in ending a marketing pact with Pfizer Inc. for the cholesterol drug Lipitor, a person familiar with the situation said Tuesday.

Warner-Lambert, fighting a $77-billion hostile bid from Pfizer, sued this week to end their marketing partnership for Lipitor, the top-selling U.S. cholesterol drug with 1999 sales exceeding $3.6 billion. Warner-Lambert prefers a friendly $66-billion merger with American Home and contends Pfizer’s unwanted offer violates a “standstill” agreement in the Lipitor pact.

A Warner-Lambert win would deprive Pfizer of a share of Lipitor profits and give Warner-Lambert all the revenue from a drug that analysts estimate will become the world’s biggest. American Home said Tuesday it would help to ensure that Warner-Lambert’s shareholders get the benefit if the company succeeds in canceling the Lipitor agreement with Pfizer.

“The value of Warner-Lambert would be substantially greater if they win against Pfizer, which is very obvious,” said Hemant Shah, an independent drug industry analyst. “It would be a gold mine for Warner-Lambert, and American Home would have to pay more.”

American Home said it would find “a mechanism, consistent with our existing merger agreement, for fairly allocating to Warner-Lambert’s shareholders additional value created by the recovery of the marketing rights to Lipitor.”

In New York Stock Exchange trading, Pfizer shares fell 81 cents to close at $36.63, making its offer worth $90.47 a Warner-Lambert share. American Home fell 50 cents to close at $52, making its offer worth $77.58 a share, 16% less than Pfizer’s bid. Warner-Lambert shares tumbled $1.38 to close at $90.