Pfizer is making a $15.2 billion bet on the drug industry’s new, more elite class of generics, which are costly, complex copies of already expensive biotech drugs.

Questions:
1. What are biosimilars?
2. Why are there questions about the durability of the market for these specialty drugs?
3. What is the dollar estimate of the 2020 market for biosimilar drugs?
4. Explain the price that Pfizer has offered for Hospira, including share price, debt, and earnings before interest, taxes depreciation and amortization.
5. Why does the deal come at a critical time for Pfizer? What is the prediction for Pfizer’s future?
6. What types of risks come with the purchase of Hospira?

Source: Gelles, D. and K. Thomas. (2015). Pfizer Bets $15 Billion on New Class of Generic Drugs. The New York Times, Feb. 5 (Retrievable online at http://dealbook.nytimes.com/2015/02/05/pfizer-to-buy-hospira-a-drug-maker-for-15-2-billion-in-cash/?action=click&contentCollection=Business%20Day&region=Footer&module=MoreInSection&pgtype=article)

Hospira Headquarters in Illinois