Pfizer to Acquire Synbiotics - Analyst Blog

Pfizer Inc.(PFE) recently announced its decision to acquire Synbiotics Corp. which will form a part of Pfizer's Animal Health unit, for an undisclosed amount. Kansas City based company, Synbiotics, is a leader in the manufacturing of immunodiagnostic tests for animals.

The addition of Synbiotics' proven and effective diagnostics solutions and interesting pipeline to its Animal Health business would bolster Pfizer's aim to become a comprehensive solutions provider in the animal health industry. Pfizer already has an innovative portfolio of vaccines and medicines which, with the acquisition of Synbiotics' animal health diagnostics, will help veterinarians provide utmost care for companion animals and livestock.

Synbiotics estimated that its common shareholders will receive about 30.6 cents per share in cash from the merger.

Veterinary immunodiagnostics is aimed at detecting viruses or bacteria in animals and is a fast growing sector. It is estimated that the global immunodiagnostics market is worth $735 million.

Neutral on Pfizer

We currently have a Neutral recommendation on Pfizer, which is supported by a Zacks #3 Rank (short-term “Hold” recommendation). While the Wyeth takeover brought with it an attractive biologics platform and some complementary products and businesses, we do not believe they are enough to sustain long-term top-line growth.

The Lipitor patent expiration in 2011 remains a big concern. Lipitor contributed almost 23% to the top-line in 2009 with sales coming in at $11.4 billion. The entry of generic versions of the product will have a significant impact on the company's financials. The loss of patent exclusivity over the coming years will make it challenging for the company to drive top-line growth.