Monsanto, Pharmacia & Upjohn agree to merge

CHICAGO, DECEMBER 19: Life sciences firm Monsanto Co and US-Swedish drug group Pharmacia & Upjohn Inc said on Sunday they agreed to merge, forming a company with a market capitalisation of more than $50 billion and an enviable collection of blockbuster drugs. The deal ends months of speculation that Monsanto, troubled by a depressed stock price and mounting opposition to its controversial genetically modified crops, would split off its agribusiness unit or be acquired by a larger company.

Under the terms of the agreement, each Pharmacia share would be exchanged for 1.19 shares of the combined company, while each Monsanto share would be worth one share. Monsanto shareholders would own 51 per cent of the combined company. The yet-to-be-named company would be the 11th largest pharmaceutical firm in the world, with $10 billion in prescription drug sales. Including revenues from the agribusiness unit and other products, the combined company would have total sales of about $17 billion.

The company would boast an arsenal of top-selling drugs to treat ailments including arthritis, glaucoma, colorectal cancer and insomnia. Monsanto’s Celebrex arthritis treatment, introduced this year, has already topped $1.4 billion in sales, while Pharmacia’s Xalatan is the world’s best-selling prescription medication for glaucoma.

The proposed global merger is unlikely to change the face of the duo’s Indian operations dramatically. Both group essentially operate through wholly-owned companies with though the Monsanto group is larger in terms of operational existence and earnings. Pharmacia & Upjohn operates via a 100 per cent subsidiary in India, with targeted sales in excess of Rs 65 crore for the current year. Pharmacia & Upjohn also has a strategic alliance with Swiss giant Novartis in India for certain animal health products.