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Pfizer Settles Asbestos Litigation

September 04, 2004|From Bloomberg News

Pfizer Inc., the world's largest drug maker, agreed to pay $430 million to resolve most personal-injury claims against a subsidiary that sold products containing asbestos in the 1970s.

The settlement will result in a third-quarter after-tax charge of $229 million, New York-based Pfizer said. Quigley Co., the subsidiary Pfizer bought in 1968, filed for federal bankruptcy protection in Manhattan on Friday. Quigley at one time made materials used to coat steelmaking equipment.

Wall Street analysts expect Pfizer to earn in the third quarter about $4.1 billion, or 54 cents a share, before charges and other one-time items, according to Thomson Financial.

Pfizer also agreed to contribute $405 million over 40 years to a trust that would pay remaining and future claims against Quigley, whose only activity since 1992 has been managing litigation. Pfizer and Quigley are named in 171,611 pending lawsuits that claim personal injury caused by exposure to asbestos, silica or mixed dust, the company said.

Asbestos, used as an insulation and fireproofing material until the 1980s, has been linked to cancer and respiratory illnesses. Asbestos-related personal-injury claims have forced more than 60 companies into bankruptcy proceedings since 1982, including W.R. Grace & Co. and Federal-Mogul Corp.

Congressional leaders have proposed a fund to compensate victims of workplace exposure to asbestos. The fund, to be financed by companies that made products with asbestos and their insurers, would bring the lawsuits to an end. Senate Democratic Leader Tom Daschle has proposed a $145-billion fund, while Republican Leader Bill Frist has suggested $140 billion.

Pfizer shares fell 15 cents to $32.55 on the New York Stock Exchange.

Pfizer continues to face about 140,000 claims against American Optical Corp., a business that Warner-Lambert bought in 1967 and sold in 1982. Pfizer inherited the liabilities when it acquired Warner-Lambert in 2000. The unit made respiratory devices and safety clothing to shield against asbestos exposure.

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