Pfizer’s €12bn deal hints at change

Pfizer has clinched the purchase of US cancer drug company Medivation in a deal valued at about $14bn, (€12.4bn) adding blockbuster prostate cancer drug Xtandi to its portfolio.

The deal comes four months after Pfizer and Botox-maker Allergan — which is based in Ireland — scrapped their $160bn merger.

That deal was enveloped in controversy amid the US presidential election as it was driven by so-called ‘tax inversion’ considerations.

Pfizer had since bought Anacor Pharmaceuticals in a $5.2bn deal to add an eczema gel to its portfolio.

The latest deal hints at a shift in Pfizer’s mergers and acquisitions strategy from lowering taxes (the rationale behind the failed Allergan deal) to strengthening its drugs portfolio ahead of a decision on selling or spinning off its generic drugs business by late 2016.

Pfizer, whose oncology offerings include breast cancer drug Ibrance and several other promising immuno-oncology products, will now get access to Xtandi as well as Talazoparib, another breast cancer treatment under development.

Xtandi, which generated US net sales of $330.3m in the second quarter, has posted double-digit growth, putting Medivation on track to achieve its target of more than 50% in revenue growth for the year.

Japanese drugmaker Astellas Pharma owns the rights to sell Xtandi outside the US. Pfizer shares were down slightly yesterday and were up 8% this year.

Medivation shares were up 20% at one stage, and are up 58% since a rival offer was first made in April. Pfizer’s offer is at a substantial premium to Sanofi’s initial offer to buy Medivation that pushed the San Francisco-based company to put itself up for sale.

“We believe the combination of Xtandi and talazoparib has the potential to be a uniquely value-added combination in the treatment of prostate cancer and should be closely watched,” Leerink analysts wrote in a client note.

Pfizer, Merck, Celgene and Gilead Sciences had submitted expressions of interest to buy Medivation.

“Given the already very high price being discussed, the difficult public relationship between Medivation and Sanofi ... we see a higher bid as very unlikely, but not impossible,” RBC Capital Partners wrote in a client note ahead of the announcement.

Sanofi said while it recognised the potential strategic benefits of a combination with Medivation, it was a “disciplined acquirer and remained committed to acting in the best interests of Sanofi shareholders.”


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