West Coast Editor

Just when the market slowdown and summer's dog days had cast a torpor over the land, Pfizer Inc. sent a blast of cooling news across the pharmaceutical landscape, disclosing that it signed an agreement to buy Pharmacia Corp. in a $60 billion stock swap.

The deal - to be completed after Pharmacia, of Peapack, N.J., spins off its remaining 84 percent ownership of St. Louis-based Monsanto Corp. (which Pharmacia previously declared it will do) - would create a world pharmaceutical leader, with revenues for 2002 estimated at about $48 billion, including $39 billion in prescription sales.

Pharmacia's stock (NYSE:PHA) jumped 20.4 percent on the news, closing Monday at $39.25, up $6.66.

Pfizer already is in the top position in the U.S. and Canada for pharmaceutical sales. By joining forces with Pharmacia, the pair would take the No. 1 spot in Europe, Japan and Latin America.

Pfizer will give 1.4 shares of its common stock for each outstanding share of Pharmacia stock in a tax-free transaction valued at $45.08 per Pharmacia share, based on the Friday closing price of Pfizer's stock of $32.20.

Pfizer's stock (NYSE:PFE) closed Monday at $28.78, down $3.42.

That's a 44 percent premium based on the closing prices of the two stocks over the last 30 days, adjusted for the Monsanto spin-off, the companies noted. New York-based Pfizer's shareholders would end up owning 77 percent of the combined company, and Pharmacia shareholders the remaining 23 percent. The deal is expected to close by the end of the year, pending shareholders' approval and regulatory clearance.

Neither company could be reached for comment, but the deal seemed to speak for itself - and loudly.

Pfizer, which already has begun to increase its research in the anticancer area, gets Pharmacia's Camptosar (irinotecan) in the deal, among other things. Both companies have an array of approved drugs and, thanks largely to Pharmacia's contribution, many are patent-protected from generic competition for the next few years, including Camptosar and Xalatan (latanoprost, for glaucoma). Another, Detrol (tolterodine tartrate, for overactive bladder), is safe from generics for even longer, until 2012.

A shining star in the deal is Celebrex (celecoxib), the first-in-class selective COX-2 inhibitor approved in January 1999 (on a new drug application filed by Monsanto), now the top-selling arthritis treatment worldwide, recently approved for acute pain and dysmenorrhea as well.

Pfizer and Pharmacia sales representatives began promoting a second selective COX-2 inhibitor, Bextra (valdecoxib) in April, following its approval by the FDA in November, also for treatment of signs and symptoms of osteoarthritis and adult rheumatoid arthritis, as well as dysmenorrhea.

Celebrex and Bextra make up more than 23 percent of new prescriptions for nonsteroidal anti-inflammatory drugs, the companies said.

In the research and development pipeline, the merged company will have almost 120 new chemical entities and 80 projects for product enhancement, with a research and development budget of more than $7 billion - again, the largest in the world. The pair said they plan to file 20 new drug applications with regulatory authorities worldwide during the next five years.