Pfizer Inc. has outbid other pharmaceutical companies and agreed to buy USA cancer drug company Medivation Inc. for $14 billion in cash, along with its sensational prostate cancer drug Xtandi, which will add to the company’s growing oncology roster.
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As per the merger deal, a subsidiary of Pfizer will start a cash tender offer to buy all of the outstanding shares of Medivation common stock for $81.50 per share.
A report published in Nasdaq informed, “Pfizer Inc.is nearing agreement to buy biotech Medivation Inc.in a move that would add one of the crown jewels of the multibillion-dollar market for cancer drugs to Pfizer’s portfolio, according to people familiar with the matter”. They now have a $82.00 price target on the biopharmaceutical company’s stock, up from their prior price target of $70.00. The drug generates sale of around $2 billion a year and the revenue is expected to double. The breast cancer medication is categorized as a PARP inhibitor, which works by disrupting the DNA fix process of cancer cells.
The deals hints at a shift in Pfizer’s M&A strategy from lowering taxes – the rationale behind the failed Allergan deal -to strengthen its drugs portfolio ahead of a decision on selling or spinning off its generic drugs business by late 2016.
Medivation also has a promising experimental breast cancer drug called talazoparib and an immuno-oncology drug called pidilizumab in late-stage development.
After rumors surfaced Sunday night that Pfizer had won the ongoing negotiations for cancer drug developer Medivation, the big pharma confirmed the acquisition Monday morning. Johnson & Johnson is developing new prostate-cancer drug that could compete with Xtandi in future market. The merger with Medivation will be Pfizer’s largest deal since Allergan.
Pfizer Inc. announced Monday that it will buy Medivation Inc., a biopharmaceutical company that develops disease treatments. But it now has a hit with Ibrance, a blockbuster drug for breast cancer. Pfizer expects to finance the transaction with existing cash. The drug is also being further developed in Phase 2 studies for the potential treatment of advanced breast cancer and hepatocellular carcinoma. Xtandi sales totaled $595 million in Q2, up 22% from a year ago, and research of Xtandi’s use earlier in prostate cancer treatment could continue to fuel future growth.
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The acquisition goes to show the increasing interest in cancer which remains the second leading cause of death in the US and a “Top 10” killer worldwide. But Piper Jaffray analyst Richard Purkiss said the price is not excessive given Xtandi’s potential for earlier treatment in coming years. The importance of strong pricing power likely led several other bidders, including Sanofi, to bid for Medivation, causing the high final acquisition price.
