Pfizer in talks to buy Wyeth as Lipitor faces losses

Pfizer Inc., seeking to replace revenue it will lose to generic competition within three years, is in talks to buy Wyeth, according to people familiar with the discussions.

A deal may be worth more than $60 billion, based on a 20% premium over Wyeth’s share price Thursday. Pfizer, the world’s biggest drug maker, has been negotiating with Madison, N.J.-based Wyeth for months, one person said. A combination would help Pfizer offset some of the $12 billion in sales it will start losing in 2011 when its top-selling cholesterol pill, Lipitor, encounters generic competition.

With $25.5 billion in cash and short-term assets as of Sept. 30, New York-based Pfizer is one of the world’s most cash-rich companies. It would gain Wyeth’s Prevnar vaccine, recommended by the U.S. government as a childhood shot against pneumonia, and dependable sales not threatened by generics. The combined company would have annual sales surpassing $70 billion, 55% more than the world’s No. 2 drug maker, GlaxoSmithKline.

“Wyeth represents perhaps the best take-out play if one assumes there will be at least some big pharma consolidation over the next one to three years,” Tim Anderson, an analyst at Sanford C. Bernstein & Co., wrote to clients.

Wyeth rose $4.91, or 12.7%, to $43.74. Pfizer rose 24 cents, or 1.4%, to $17.45.

Ray Kerins, a spokesman for Pfizer, said the company wouldn’t comment on “market speculation.” Doug Petkus, a spokesman for Wyeth, didn’t immediately return a call.