NEW YORK (AP) — Pfizer Inc. is buying rival drugmaker Wyeth in a $68 billion deal that will increase its revenue by 50 percent, solidify its No. 1 ranking in the troubled industry and transform it from a pure pharmaceutical company into a diversified health care giant.

At the same time, Pfizer announced cost cuts that include slashing more than 8,000 jobs as it prepares for an expected revenue crash when its cholesterol drug Lipitor — the world's top-selling medicine and source of one-quarter of Pfizer's revenue — loses patent protection in November 2011.

The cash-and-stock deal, expected to close at the end of the third quarter or in the fourth quarter, comes as Pfizer's profit takes a brutal hit from a $2.3 billion legal settlement over allegations it marketed certain products for indications that have not been approved. The New York-based company is also cutting 10 percent of its work force of 81,900, slashing its dividend, and reducing the number of manufacturing sites from 46 to 41. Those closures, and reducing its facilities square footage by about 15 percent, will cost about $6 billion before taxes, of which $1.5 billion has been incurred, Pfizer said.

After the deal closes Pfizer expects to cut more jobs. The company said it expects eventually to cut the companies' combined workforce by 15 percent, a figure that includes the Pfizer cuts announced yesterday.

The company, which has been under pressure from big investors to make a bold move, said it has not identified which plants it will close.

Job cuts at Pfizer will begin in the first quarter and are to be complete by 2011, according to company spokesman Ray Kerins. Cuts will include most departments, from administration in sales to manufacturing and research.

"It will be done in a methodical way," Kerins said. "We will continue to look at the staffing needs of the company and make decisions based on those needs."

Pfizer said it anticipates the new cost-cutting programme will reduce spending by about $3 billion, $1 billion of which will be reinvested in the business. That's on top of an existing cost-cutting programme that has produced about $2.8 billion in annual savings, compared with 2006 levels.

Pfizer chief financial officer Frank D'Amelio said in a statement that the tie-up will bring about $4 billion in cost savings by the end of 2012. The company said the deal should add to Pfizer's earnings per share in the second full year after closing.

Early yesterday, Pfizer, the maker of Lipitor and impotence pill Viagra, said it will pay $50.19 per share under for Wyeth, valuing Madison, New Jersey-based Wyeth at a 14.7 percent premium to the company's closing price of $43.74 last Friday.

Both companies' boards of directors approved the deal but Wyeth shareholders must do so, antitrust regulators must review the deal and a consortium of banks lending the companies $22.5 billion must complete the financing.

The deal is being financed by five banks, according to Kerins. They are Bank of America Merrill Lynch, Barclays, Citigroup, Goldman Sachs and JPMorgan Chase.

The deal is likely to be reviewed by the Federal Trade Commission, which splits antitrust oversight with the Justice Department and typically handles pharmaceutical acquisitions.

FTC spokesman Mitch Katz said the agency doesn't comment on pending transactions.

Analysts were split on how good the deal is.

"This deal doesn't bring Pfizer the cure for Lipitor" revenue losses, but it brings short- and long-term cost savings, said Erik Gordon, biomedical analyst and professor at University of Michigan's Ross School of Business. "It increases Pfizer's research capabilities in biologics (drugs made from living cells), and it's good for Wyeth because Wyeth will now be able to tap into Pfizer's marketing machine."

Credit Suisse analyst Catherine Arnold wrote to investors that the deal's addition to Pfizer earnings "should be massive." She thinks earnings could be boosted even before the second year, as Pfizer is predicting.

In a note to investors, she wrote that high-yield fund managers will find the dividend cut — from 32 cents to 16 cents — disappointing.

The deal is likely to be closed, she added. "The high cash contingent may make it difficult for interlopers to intercede, as it involves both Pfizer's existing cash, and new debt" of $22.5 billion.