Pfizer in $725m drugs deal

Pfizer has agreed to buy an antibiotics business from AstraZeneca for $725m (€640m) as well as other payouts, settling for one piece of a company it once tried to acquire.

Pfizer will pay $550m to AstraZeneca when the transaction closes, and make another payment of $175m in January 2019.

In addition, AstraZeneca is eligible to receive as much as $250m in milestone payments, up to $600m in sales-related payments, as well as certain royalties.

New York-based Pfizer has been looking for ways to bolster both its pipeline and portfolio of marketed drugs after two failed attempts at a major acquisition, first with AstraZeneca in 2014, then with Allergan, the Botox maker which is based here.

The US drugmaker this week agreed to buy Medivation, maker of the Xtandi prostate cancer drug, in a $14bn deal.

AstraZeneca, meanwhile, has been shoring up falling revenue by licensing out and selling assets not central to its business, enabling investment in focus areas, such as cancer research.

The London-based drugmaker in June sold rights to its anaesthetics medicines, another non-essential area, to Aspen Pharmacare. Revenue from “externalisation”, as the company calls it, and divestments was $2.3bn last year. AstraZeneca has said it would generate more than that this year.

Pfizer shares were slightly higher yesterday and have risen 9% this year. AstraZeneca also rose slightly and have gained 10% this year.

As a result of the divestment, AstraZeneca will cease to invest in commercial activities in its small molecule antibiotics business, and does not anticipate that any of its sales force will be transferred to Pfizer as part of the transaction, a spokeswoman said.

Pfizer is buying rights to several of AstraZeneca’s experimental and approved antibiotics in global markets outside the US, including Zavicefta, which is used to treat severe bacterial infections resistant to other drugs — an area of growing need.

The transaction will give Pfizer rights to three medicines already on the market, including Zavicefta, which was approved by the European Commission in June. It also gives Pfizer two drugs that are still in clinical development, including one to treat methicillin-resistant staphylococcus, or MRSA, infections.

AstraZeneca’s portfolio will add to more than 60 anti-infective and anti-fungal medicines. It said it was “pleased that our strong science in antibiotics will continue to serve a critical public health need through Pfizer’s dedicated focus on infectious diseases”.