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Pfizer has been on an acquisition spree as it seeks to cushion the impact of a projected $17 billion revenue drop 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 hits record lows and is the largest in the biopharmaceutical giant’s recent string of acquisitions. With the deal, Pfizer adds to its cancer treatment cache four approved therapies which brought in a combined total of almost $2 billion in 2022.
Pfizer will pay $229 in cash for each Seagen share, a 32.7% premium to Friday’s closing price and nearly a 42% premium to the stock’s close on February 24, a day before news of a possible deal broke. Seagen’s shares rose to $207 in pre-market trading on Monday as Pfizer shares fell 2.9% to $38.25.
Pfizer chief executive Albert Bourla said the company was “deploying its financial resources to advance the battle against cancer,” adding that cancer treatment continued to be “the largest growth driver in global medicine.” As such, the Seagen deal, according to Bourla, is in line with Pfizer’s near 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 an acquisition spree as it seeks to cushion the impact of a projected $17 billion revenue drop by 2030 due to patent expirations for top drugs and a decline in demand for its Covid vaccine and pill products. Seagen on the other hand has a projected revenue of $2.2 billion, a 12% increase year on year. The drug maker 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 deals, we think integrating such a large company could make (Pfizer) take a pause on M&A front.”
Many pharmaceutical companies have not expressed much interest in making cheap purchases despite the marked drop in biotech stocks over the past year. They have instead opted for low-risk acquisitions with drugs either approved for the market or close to receiving approval.