Pfizer continues to make acquisitions as it seeks to offset the impact of an expected $17 billion decline in revenue by 2030.
Pfizer Inc (NYSE: PFE) has entered into a $43 billion deal with biotechnology company Seagen Inc to acquire its leading cancer drug line. The deal marks record-low earnings from Pfizer’s COVID-19 vaccine and tablets, and is the largest in a string of recent acquisitions for the biopharmaceutical giant. Added four approved therapies to its therapeutic cache, bringing in a total of nearly $2 billion by 2022.
Pfizer will pay $229 in cash for each Seagen share. That’s a 32.7% premium over Friday’s closing price, and a day before news of a possible trade was announced, he’s about a 42% premium over February 24’s closing price. Seagen’s shares climbed to $207 in pre-market trading on Monday as Pfizer’s shares fell 2.9% to $38.25.
Pfizer CEO Albert Vora said the company is “funding to advance the fight against cancer,” and that cancer treatment remains “the largest growth in global health care.” As such, the Seagen deal aligns with Pfizer’s short-term and long-term financial goals, Bourla said. The company already has 24 approved cancer drugs and 33 programs in clinical development.
The pharma giant continues to make acquisitions to offset the impact of a projected $17 billion drop in revenue by 2030 due to patent expirations on top drugs and declining demand for its Covid vaccine and pill products.Meanwhile, Seagen projected revenue of $2.2 billion, up 12% year over year. The drug maker expects “risk-adjusted” sales from Seagen to exceed $10 billion in 2030.
Wells Fargo analyst Mohit Bansal wrote in a research note:
“Pfizer still has more firepower to do deals, but we believe that consolidating such a large company could put Pfizer on the M&A front for a pause.”
Despite the significant drop in biotech stocks over the past year, many pharmaceutical companies have shown little interest in buying cheap. They have instead opted for low-risk acquisitions with drugs that are or are nearing market approval.
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