Pfizer’s £11bn cancer inroad
PFIZER gave its growing oncology operation a shot in the arm as it beat competition from rival suitors to land Californian biotech company Medivation in a $14billion (£10.6billion) deal.
The American giant, which has lost out on takeover deals for UK-listed Astra-Zeneca and Ireland’s Botox maker Allergan, said the combination would provide an immediate boost to earnings
Several companies including Merck, Celgene and Gilead have expressed an interest in buying Medivation, which put itself up for sale after an approach from French drugmaker Sanofi.
Pfizer’s pursuit was driven mainly by its desire to obtain best-selling prostate cancer drug Xtandi, which generated US net sales of $330million in the second quarter. But it also talked up prospects for experimental Medivation treatments Talazoparib for breast cancer and Pidilizumab for lymphoma.
Pfizer chief executive Ian Read said: “The proposed acquisition of Medivation is expected to immediately accelerate revenue growth and drive overall earnings growth potential for Pfizer. It will strengthen Pfizer’s innovative health business and accelerate it to leadership in oncology, one of our focus areas, which will drive greater growth and scale of that business over the long-term.”
The deal marks a shift in Pfizer’s strategy from lowering taxes to strengthening its pipeline of branded drugs. It is seen as increasing the likelihood of Pfizer splitting into separate companies selling either generic treatments or patent-protected brand medicines.
Ketan Patel at EdenTree Investment Management said: “Pfizer management will be pleased to have landed a prize asset following several high-profile failed bids. It has been playing catch-up in immuno-oncology, currently the hottest area in drug development.
“The wider oncology market is worth $80billion in annual sales and is growing at 10 per cent a year.
“The long-term question for investors remains whether Pfizer has overpaid for an asset in a highly competitive and fast moving therapeutic area.”