In the latest pharmaceutical industry consolidation, TheUpjohn Co. and Pharmacia AB have agreed to a stockswap that combines the two rival drug companies into anew firm, called Pharmacia & Upjohn Inc., vauled atabout $13 billion.

The boards of Upjohn, of Kalamazoo, Mich., andPharmacia, of Stockholm, Sweden, have approved themerger and shareholders are expected to vote on the dealin November. Upjohn officials said Monday it would takea year to actually integrate the two companies. About4,000 employees from a combined 34,000 are expected tolose their jobs.

Corporate headquarters for the new entity, Pharmacia &Upjohn, will be in London with operational centerslocated in Kalamazoo, Stockholm and Milan, Italy.

Pharmacia's president and CEO, Jan Ekberg, will bechairman of Pharmacia & Upjohn. John Zabriske,Upjohn's chairman and CEO, will be president and CEOof the merged company.

In the transaction, Pharmacia stockholders will receiveone share of the new company for each Pharmacia share.For every Upjohn share, stockholders will get 1.45 sharesof Pharmacia & Upjohn. The new company will have 504million shares outstanding, divided equally between thetwo companies' stockholders.

Pharmacia's two largest shareholders, Sweden-based ABVolvo and the Swedish government, said they supportedthe consolidation.

Based on combined 1994 revenues, Pharmacia & Upjohnwould have had $7 billion in sales. Research anddevelopment expenses are expected to top $1 billion ayear.

Although no details were available on research fundsearmarked for biotechnology-related products, Upjohnspokesman Joe Heywood said that of the 6,300 scientistsworking for Pharmacia & Upjohn more than 1,000 willbe involved in the area of molecular biology.

Listed among the new company's biggest selling productsis Pharmacia's Genotropin, which is human growthhormone licensed from South San Francisco-basedGenentech Inc.

The merger agreement was disclosed Sunday. Upjohn'sstock (NYSE:UPJ) closed Monday at $40.75, a jump of$1.13. Pharmacia (NASDAQ:PHARY) ended the day at$26.50, a $1.13 increase. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.