NEW YORK (Reuters) – Pfizer Inc, the world's largest drugmaker, has agreed to buy King Pharmaceuticals Inc for $3.6 billion in a move to shore up earnings ahead of the looming evaporation of revenue from Lipitor, its biggest product.

Pfizer, which is still digesting last year's $67 billion acquisition of Wyeth, said yesterday it will pay $14.25 a share for King — representing a 40 percent premium over King's closing share price on Monday.

Pfizer said it expects the transaction to add to its adjusted earnings per share by about two cents for both 2011 and 2012 and by three cents to four cents annually from 2013 to 2015. And it reaffirmed its earnings forecast for 2012.

The company said it expects to generate initial cost-savings of more than $200 million, of which 50 percent will be realised in the first year, 75 percent in the second, and 100 percent in the third year. Pfizer late next year faces the expiration of the US patent on the cholesterol fighter Lipitor, the world's biggest-selling prescription drug which even amid declining sales will generate global revenue in excess of $11 billion this year. Once a branded drug faces generic competition, it quickly loses upward of 80 percent of revenue.

The deal will significantly expand Pfizer's presence in the market for pain drugs by adding King's pain portfolio to its own pain products, such as Lyrica and Celebrex.

Bristol, Tennessee-based King will bring Avinza, the Flector Patch and the recently launched Embeda, the first approved opioid pain product intended to discourage abuse. King has other abuse-resistant pain products in development as well.

Opioids — which include morphine, fentanyl and oxycodone — are powerful narcotic drugs that can be highly addictive. That has led companies on the difficult mission of creating drugs that are therapeutic but also difficult to abuse. King is a leading player in the space. The market for pain relief and management is large and increasing. Physicians in the US States wrote about 320 million prescriptions to treat pain in 2009, Pfizer said.

"King's leadership in new formulations of pain treatments designed to discourage common methods of misuse and abuse will provide Pfizer with multiple new drug delivery platforms, while providing potential long-term upside," the company said.

Pfizer shares were down 0.1 percent at $17.36 and King shares were up $4.01 or 39.5 percent at $14.16, both on the New York Stock Exchange, yesterday.