The reason: Pfizer's Greenstone unit makes a cheap generic autoinjector that presumably competes directly with EpiPen. It's not hard to see why a Pfizer-owned King might no longer see the need to supply Mylan with EpiPens at some point down the line.
The autoinjector market is, in theory, a crowded one. There's a nice summary of the EpiPen competitors here. Sciele Pharma's Adrenaclick generic was recently approved and Pfizer/Greenstone got the license to sell it. Sanofi-Aventis (SNY) also signed a licensing agreement with Intelliject, another potential rival. And Shionogi Pharma, Sciele's parent, markets a product called Twinject.
However, according to its most recent 10-Q filing with the SEC, Mylan claims to maintain a 91 percent global market share in the auto-injector business, and a 96 percent share in the U.S. It's not clear how much the EpiPen earns in revenue, but it's about 56 percent of Mylan's Speciality division, which has revenues of $124 million per quarter, or about 9 percent of Mylan's entire revenue.
The King acquisition now puts Pfizer in control of 96 percent of the U.S.'s supply of EpiPen, plus one of EpiPen's generic competitors. Surely, Mylan and King had contracts in which King (and now Pfizer) will be required to continue providing Mylan with product. Mylan owns the EpiPen brand, but that's not much use without actual EpiPens to sell -- and Pfizer now owns those.
Here's some speculation: Those contracts will have dates on them, and those dates will expire. Meanwhile Pfizer/Greenstone can get to work using all King's internal data on EpiPen to improve Adrenaclick. When the contract expires, Pfizer will have to ask itself whether it actually needs Mylan's salesforce to continue selling its new virtual monopoly.