Pfizer and King Pharmaceuticals announced on Tuesday they have entered into a definitive friendly merger agreement. Under the terms, Pfizer will acquire King, a diversified specialty pharmaceutical company based in Tennessee, for $3.6 billion in cash, or $14.25 per share. The company emphasized the deal is not dilutive of earnings and will not affect its forecast estimates on market performance for the full year.

King, a mid-sized player in the industry, has been a suspected acquisition target for Big Pharma for some time, given its concentrated franchise in the lucrative therapeutics for pain market.

• The deal indicates Pfizer will remain a key player in primary care, with a new emphasis beyond the statin franchise that drove the business over the past decade. King’s inventory of small molecule drugs will prove useful in keeping Pfizer active in high volume businesses linked to prevalent chronic diseases. It will thus augment the company’s recent entry through Wyeth into high-cost specialty biologics.

• King will also cement Pfizer’s effort to become the therapy lead in pain management, building on the existing Celebrex and Lyrica franchises. The expectation is that patients will continue to pay a premium for pain relief, particularly for the explosion in arthritis predicted as the baby boom population ages.

• King’s expertise in new delivery technologies will also help other Pfizer products find new markets and seed introduction of process improvements “beyond the pill.”

On the down side, more staff restructurings—and a $200 million anticipated cost savings—will follow the acquisition and likely trigger additional efforts to review the status of under-performing segments of the overall business, such as oncology. Diversification is clearly the Pfizer strategy—but even for a behemoth like Pfizer it could be too much of a good thing. Look for some winnowing down of asset categories in the early part of next year.

“The first thing out of everyone’s mouth when they come to my table is, ‘How are you handling the new PhRMA guidelines?’” said Tammy Kornfeld, senior account manager of Beyond Branding at Compas. The new marketing code is set to take effect in January 2009.

Kornfeld said the company is distributing flash drives with presentations explaining the tactics pharma companies can employ under the new regulations. “Reps may not be able to pass out pads and pens anymore, but there are many things that they will still be able to do,” she said. Kornfeld also added that, though the gifts are gone, corporate material can still be distributed.

Times have dramatically changed for the industry, said Chris Adams Kaufman, senior director of marketing operations at King Pharmaceuticals, from when she began as a sales representative more than 30 years ago. “When I started, profits were huge, sales were going up all the time, the drugs were all patented,” she said. “And now it is more of a challenge.”

Kaufman says differentiating your brand in the face of generic competition and selling products in an increasingly restricted managed healthcare system are the major issues confronting marketers. And while the new PhRMA guidelines will pull back on the activities companies can conduct (and the number of pens that they can pass out), Kaufman believes the industry can easily overcome that barrier with a little creativity. Despite a shrinking sales force, she says, reps are still integral to delivering a brand. And we shouldn’t forget it.

“There are business clichés that say there are two jobs in America: You either make it or sell it,” said Kaufman. “Being a sales rep demonstrates you have the intelligence to do the job, learn the therapeutic category, learn the marketing place, understand the clinical studies, and acquire both oral and written communication skills.” She’s sure that reps can learn how to maneuver in the new environment as well.

The trends that surfaced today are clear: It’s time to prepare to enter a new era of marketing to physicians, be cognizant and ready for the inevitable challenges, and remember the invaluable service of our sales force teams.

In a pointed letter to Alpharma’s board, King President and CEO Brian A. Markison stated that every effort to negotiate terms and costs with Alpharma has been ignored.

“While we would prefer to work cooperatively with you and your Board to complete a negotiated transaction, our Board of Directors has authorized management to commence a tender offer to purchase all of the outstanding shares of Class A Common Stock of Alpharma for $37 per share in cash, which we intend to do promptly.”

On August 22, Alpharma President and CEO Dean J. Mitchell rejected King’s initial offer stating, “the proposal is inadequate and does not reflect the Company’s inherent value.” Mitchell accused Markison of publicly commenting on negotiations without a confidentiality agreement and noted that the offer was not up to snuff because of potential earnings of Alpharma’s pain drug Embeda, currently under review by FDA.