By Michael J. de la Merced

New York Times News Service

Pfizer agreed Monday to combine its off-patent drugs division, which controls treatments like the statin Lipitor, with the pharmaceutical company Mylan, creating a potential powerhouse in the business of medicines without patent protections.

The transaction comes as falling prices increase pressure on generic drugmakers, a development that has been mostly overlooked in the United States as consumers grapple with the escalating price of branded treatments. The deal also raises questions about whether it will spur other acquisitions in the sector.

Generic drugmakers like Mylan and Teva have struggled in part because pharmacies and wholesalers have been teaming up, increasing their power to bargain for lower prices. That has forced such companies consider mergers as a way of regaining leverage.

Pfizer has shifted its focus in recent years to treatments expected to enjoy patent protections for years. That has meant striking big deals to acquire promising new drugs, like its $10.6 billion takeover bid last month for Array BioPharma, a maker of specialized cancer treatments.

Pfizer’s shift has also prompted it to dispose of its lower-margin businesses.

Last year, for example, it agreed to combine its consumer health care division with that of GlaxoSmithKline.

Under the terms of the deal announced Monday, Pfizer will spin off the off-patent unit, Upjohn, which makes drugs whose patents have expired, and combine it with Mylan in an all-stock deal.

Pfizer just created the Upjohn business at the beginning of this year, by peeling off carefully selected off-patent drugs that were part of Pfizer’s established products division. Upjohn now sells many of Pfizer’s greatest hits from the past quarter-century that have generic competition but still sell well in many countries: Viagra, painkillers Celebrex and Lyrica, Norvasc for high blood pressure, Effexor for severe heartburn, Xanax for anxiety and Zoloft for depression. Those drugs contributed about 23% of Pfizer’s total sales last year.

The combined business, which will eventually be renamed, is expected to have about $19 billion to $20 billion in annual sales. The companies anticipate annual cost savings of $1 billion by 2023 as a result of the deal.

“We are creating a new champion for global health — one poised to bring world-class medicines to patients across a wide range of therapeutic areas,” Albert Bourla, Pfizer’s chief executive, said in a statement.

Heather Bresch, who had led Mylan when it was the target of outrage over the climbing cost of its EpiPen emergency allergy treatment in 2016, will step down as chief executive. She will be succeeded by the head of Upjohn, Michael Goettler.

Bresch, whose father is Sen. Joe Manchin, D-W.Va., spent nearly her entire career at Mylan and became chief executive in 2012.

She became one of the pharmaceutical industry’s most recognizable faces in 2016 when it emerged that she had received pay raises even as Mylan was raising the price of the EpiPen, a vitally important medicine.

Bresch, who was among the first in the industry to try to pin the blame for rising drug prices on rebates paid to pharmacy-benefit managers, survived the episode. She weathered other controversies as well, including in 2014, when Mylan executives angered many shareholders by moving their headquarters to the Netherlands from Pennsylvania to block a takeover by Teva that many investors favored. More recently, Mylan and other large makers of generic drugs were targeted in a price-fixing investigation that is continuing.

The transaction is expected to close by the middle of next year, pending the approval of regulators and Mylan shareholders.

Pfizer shares were down close to 3% in early trading Monday, at $41.89. Mylan shares were up about 14%, at $21.04. Teva shares were up 4% in premarket trading, suggesting that investors anticipate it may also pursue a deal.

— The Associated Press contributed to this report.

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