Pfizer (NYSE:PFE) has inherited a lot in its acquisitions of Warner-Lambert, Pharmacia, and Wyeth: lots of drugs, a few plants that needed to be closed, and researchers who need to be let go. And of course, those 10,000 lawsuits.
Well, it's closer to 9,998 now that two verdicts were revealed on Monday. The lawsuits, which went against the company for $103 million total in punitive damages, involve hormone replacement therapies Premarin and Prempro, which Pfizer got from Wyeth, and Provera, which came along in the Pharmacia deal. Women claim that the drugs caused them to get breast cancer.
Pfizer plans to appeal the decisions, so I guess we're back up to 10,000 after all.
Working in Pfizer's favor, the drugs haven't been pulled from the market because of safety concerns, unlike Merck's (NYSE:MRK) Vioxx and Wyeth's Fen-Phen. But plaintiffs claim that Wyeth played down the breast cancer risk while Pharmacia failed to study known risks.
Ultimately, the mass of cases seems destined for a class action settlement. Pfizer could fight each and every case, but after a few are tried, both sides get an idea of exactly how much it's going to cost Pfizer to settle. With plaintiffs having won 10 of 12 cases where juries have reached a verdict so far, this could cost Pfizer quite a bit.
Fortunately, Pfizer knew about the cases going into the acquisition of Wyeth, so it probably factored the potential settlements into its price. Still, the cash used to settle the lawsuits could be better spent licensing a few drugs, or toward the purchase of a company like Genzyme (NASDAQ:GENZ) or Biogen Idec (NASDAQ:BIIB) to help boost Pfizer's push into biologics.
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