Pfizer has been on an acquisition spree as it seeks to cushion the impact of a projected $17 billion drop in revenue by 2030.
Pfizer Inc (NYSE: PFE) has closed a $43 billion deal to acquire biotechnology company Seagen Inc and its leading line of cancer drugs. The deal comes as revenue from Pfizer’s COVID-19 vaccine and pill hit record lows and is the biggest in the biopharma giant’s recent spate of acquisitions. With the deal, Pfizer adds to its cancer treatment cache four approved therapies that generated a combined total of nearly $2 billion in 2022.
Pfizer will pay $229 in cash for each Seagen share, a 32.7% premium over Friday’s closing price and a nearly 42% premium over the shares’ February 24 close, the day before news of a possible deal broke. Seagen shares rose to $207 in premarket trading on Monday, while Pfizer shares fell 2.9% to $38.25.
Pfizer CEO Albert Bourla said the company was “deploying its financial resources to advance the battle against cancer,” adding that cancer treatment remained “the biggest growth driver in global medicine.” As such, the Seagen deal, according to Bourla, is in line with Pfizer’s short- and long-term financial goals. The company already has 24 approved cancer drugs with 33 programs in clinical development.
The pharmaceutical giant has been on a spree of acquisitions as it seeks to cushion the impact of a projected $17 billion drop in revenue by 2030 due to expiring patents for major drugs and a decline in demand for its vaccine products and Covid pills. Seagen, on the other hand, has projected revenue of $2.2 billion, up 12% year-over-year. The drugmaker expects more than $10 billion in “risk-adjusted” sales from Seagen in 2030.
In a research note, Wells Fargo analyst Mohit Bansal wrote:
“While Pfizer still has more firepower to do business with, we believe the integration of such a large company could give (Pfizer) pause on the M&A front.”
Many pharmaceutical companies have not expressed much interest in buying cheap despite the sharp decline in biotech stocks over the past year. Instead, they have opted for low-risk acquisitions with drugs that are approved for the market or close to approval.
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Mercy Mutanya is a technology enthusiast, digital marketer, writer, and IT business management student. She likes to read, write, do crossword puzzles, and binge-watch her favorite TV series.
