Pfizer is buying biopharmaceutical company Medivation in a deal valued at about $14 billion. Reports also said that it represents a 118-percent rise since March when Medivation had hired JP Morgan to handle interest from several companies in a potential acquisition.
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Xtandi, which generated United States 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 50pc in revenue growth for the year.
Pfizer said Monday that it will pay $81.50 per Medivation share.
Last year, Pfizer announced it was joining forces with Allergan PLC in a $150 billion takeover deal, but backed out in April after new U.S. Treasury rules were issued under the Obama administration. This is going to be the biggest deal of Pfizer since they purchased Hospira Inc. for $17 billion in 2015. Pfizer has been seeking to expand its lineup of oncology treatments.
The deal marks a shift in Pfizer’s strategy from lowering taxes to strengthening its pipeline of branded drugs. Similar to Ibrance in the breast cancer setting, Xtandi is being explored for its potential to move from metastatic prostate cancer to treat earlier stages of non-metastatic prostate cancer.
The merger with Medivation will be Pfizer’s largest deal since Allergan.
Xtandi generated USA net sales of US$330.3 million in the second quarter.
Xtandi, which is being co-developed and marketed by Medivation and Astellas Pharma, has also generated criticism for its high price.
Some analysts, including BMO’s Alex Arfaei, said Pfizer appeared to be overpaying for Medivation.
Xtandi has drawn attention from the public interest group Knowledge Economy International, which has protested the $129,000-a year list price for the treatment.
“Given the already very high price being discussed, the hard 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.
Although Pfizer is paying a big premium to Medivation’s trailing sales to buy the company, Pfizer still expects that the deal will add $0.05 per share to earnings in the first full year after the deal closes.
Shares of other cancer drug companies, including Incyte Corp and Seattle Genetics, also rose yesterday, as investors speculated about more dealmaking in the sector.
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Pfizer’s financial advisors for the transaction were Guggenheim Securities and Centerview Partners, with Ropes & Gray LLP acting as its legal advisor.
