New York-based US drugs giant Pfizer is merging its off-patent franchise, Upjohn, with generics specialist Mylan. The deal announced on Jul. 29 and expected to close in mid-2020 foresees a combined entity based in the US state of Delaware with pro forma sales of $19-20 billion.

A name has not yet been announced, but Pfizer said the business will be renamed and rebranded at closing. “By bringing Mylan’s growth assets to Upjohn’s growth markets, we will create a financially strong company with true global reach,” Pfizer CEO Albert Bourla said.

For Pfizer, Bourla said the spin-off will mean a sharper focus on innovative medicines. At the same time, the drugmaker will retain the financial flexibility to advance its strong pipeline, invest for growth and continue to return capital to shareholders, he added.

Analysts have long seen Pfizer as ripe for a spin-off or sale of its off-patent portfolio. After weighing the odds, however, former CEO Ian Reid last ditched the idea in favor of a restructuring exercise.

Under the all-stock reverse Morris trust transaction the companies are now planning, Pifzer would own 57% and Mylan 43% of the new firm. Pfizer plans to issue $12 billion in new debt to stem the merger.

Mylan and Pfizer already collaborate on the epilepsy drug injector EpiPen, which is recommended to prevent anaphylactic shock. Mylan owns the drug and subcontracts manufacturing to Pfizer’s Meridian Medical arm, which has had problems making enough. Mylan in the past also has been criticized for jacking up the price of the medication.

Robert J. Coury will lead the new firm as executive chairman, Rajiv Malik will serve as president, and Michael Goettler, who currently heads Upjohn, will be CEO. Mylan’s CFO, Kenneth Parks, will leave the company at closing, and the generics producer’s CEO, Heather Bresch, daughter of West Virginia senator Joe Manchin, will retire after 27 years.

The Upjohn unit encompasses all of Pfizer’s oral solid generics and off-patent branded medications, including blockbusters such as erectile dysfunction drug Viagra and cholesterol drug Lipitor. Biosimilars and the legacy Hospira sterile injectables are not part of the deal because Pfizer grouped those products under its biopharma unit during the reorganization.

Mylan manufactures more than 7,500 products, including biosimilars, generics, branded and over-the-counter drugs. The company also lays claim to being one of the world’s largest manufacturers of active pharmaceutical ingredients (APIs).

Analysts called the Pfizer-Mylan deal “a smart, strategic move” for Pfizer. Cantor Fitzgerald analyst Louise Chen said it could boost revenue growth past the mid-single-digit rate the company has seen between 2021 and 2025. RBC’s Randall Stanicky said the deal looks attractive for Mylan shareholders, especially as the generics producer’s shares have been trading at a “notable discount” to Teva’s.

Stanicky said a more geographically diversified portfolio, with US generics accounting for less than 15% of the new firm’s operational earnings, could help could provide more stability amid US pricing pressures.

Mylan is officially based in the Netherlands, but managed from Pittsburgh, Pennsylvania. The analyst said a combined company based in the US could be more shareholder-friendly by shedding a Dutch legal provision known as “Stichting” – a type of holding – that Mylan installed in 2015 to fend off a hostile takeover from Teva.