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Biotech / Medical : PFE (Pfizer) How high will it go? -- Ignore unavailable to you. Want to Upgrade?

To: Anthony Wong who wrote (3538)	6/16/1998 11:02:00 AM
From: Anthony Wong	Respond to of 9523

Bloomberg - Boston Scientific to Buy Pfizer Unit for $2.1 Bln Bloomberg News June 16, 1998, 6:28 a.m. PT Boston Scientific to Buy Pfizer Unit for $2.1 Bln (Update1) (Adds Schneider sales in 6th paragraph, analyst comment in 7th.) Natick, Massachusetts, June 16 (Bloomberg) -- Boston Scientific Corp. said it will buy Pfizer Inc.'s cardiovascular devices unit for $2.1 billion in cash, giving it a larger piece of the market for devices to hold open cleared arteries. Pfizer said in February that it was considering selling or spinning off its medical technology group as it focused on its more profitable drug business. The group's Schneider Worldwide unit sells devices used in angioplasty, a procedure done to clear clogged arteries, including stents, which are used to prop open arteries after the procedure. Schneider sells peripheral stents, used in blood vessels in areas outside the heart such as the kidneys and neck. Buying Schneider gives Boston Scientific wider access to that market, along with allowing it to use Schneider's technology in the U.S. that allows for easier removal and exchanges of balloons used in angioplasty. ''Boston Scientific will become the dominant player in peripheral vascular intervention,'' said Sam Navarro, an analyst at Furman Selz LLC. ''Beyond 1998, the peripheral stent market will absolutely grow faster than coronary and there's less competition.'' Boston Scientific fell 1 1/8 to 61 yesterday. Pfizer fell 1 5/16 to 108. Bulach, Switzerland-based Schneider had sales of about $330 million in 1997. Though Schneider isn't coming cheap for Boston Scientific, it's worth the price and Boston Scientific will likely shed some of Schneider's infrastructure, analysts said. Cost Savings ''They can justify the price based on the technology they're going to acquire and the tremendous cost savings they can realize,'' said Darrell Riley, an analyst at T. Rowe Price, which owns shares in Boston Scientific. ''They basically have this big organization to cherry pick from to plug in holes in their own organization, and the rest of it goes.'' Pfizer has two other divisions in its medical technology group. The Howmedica unit sells orthopedic devices and the American Medical Systems unit sells urological implants used to treat impotence and incontinence. Pfizer said it's still evaluating possibilities for those divisions. Though the drugmaker wouldn't comment on whether there were other bidders for Schneider, analysts said Arterial Vascular Engineering Inc., a maker of stents and other cardiovascular products, was viewed as another likely candidate. The acquisition, slated to close later this year, is expected to reduce earnings for Natick, Massachusetts-based Boston Scientific in 1999, the company said. Drugmakers are focusing more on making new medicines and some have been selling and spinning off their medical technology and medical supply units. ''Most have almost completed these transactions,'' said Hemant Shah, an analyst who covers the drug industry. In 1994, Eli Lilly & Co. spun off its medical device businesses, forming Guidant Corp., now one of the leaders in sales of coronary stents. In March, American Home Products Corp. sold its medical supplies unit, Sherwood-Davis & Geck to Tyco International Ltd. for $1.77 billion in cash. The unit, which sells catheters, needles and syringes to its hospital supply product line, had about $1 billion in annual revenue. Pfizer said it will use the $2.1 billion in cash for general corporate purposes. These could include paying off debt and stock buybacks, Shah said. Pfizer had 1997 profit of $2.21 billion on revenue of $12.2 billion. This year, it has started sales of the impotence pill Viagra and the antibiotic Trovan. --Marion Gammill (609) 279-4097 and Kerry Dooley (609) 279-4016