Drug companies Pfizer (manufacturers of Viagra) have announced plans to merge with competitor Allergan (manufacturer of Botox) and form the world’s biggest drug company worth an estimated $US160 billion ($A222 billion).

The Wall Street Journal has reported the merger would create an “advertising behemoth”. How the merger will play out in Australia is not clear although both are major players in the local market.

Pfizer is already one of the biggest advertisers in the US (presently ranked seventh) and spends a reported $US1.4 billion annually in that country alone.

Many believe that the merger is simply about tax-minimisation. The deal will see the much larger US-based Pfizer move its head office to the tax-friendlier Allergan HQ in Ireland. It has been reported that Pfizer’s tax rate will fall from about 35 per cent to only 12.5 per cent in the move across the Atlantic

“The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world,” said Ian Read, chairman and CEO of Pfizer, in a statement.

The combined companies will produce brands like Celebrex (arthritis), Viagra, Botox and Juvéderm (anti-wrinkle) and generate roughly $US63 billion in sales.

However, not everyone’s happy about Pfizer pulling out of the US – and taking a stack of tax dollars with it.

The deal has reportedly enraged the Democrat side of politics in the US. Presidential hopeful Hillary Clinton said the deal will leave American taxpayers “holding the bag” and would look at measures to prevent other companies doing something similar. While other Democrats are pressuring the Obama administration to block the deal.

It is unclear if the pending merger will reduce the price of both company’s products, however.