Pfizer Acquires Medivation for $14 Bi...
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Aug
22
Sandeep Singh Dhillon
Pfizer Acquires Medivation for $14 Billion (PFE, MDVN) – Investopedia.com
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American pharmaceutical corporation, Pfizer Inc.(PFE) has confirmed it will be acquiring San Francisco-based biopharmaceutical company, Medivation Inc (MDVN) for $81.50 a share and a total enterprise value of $14 billion in an all-cash deal. The deal is projected to expand Pfizer’s portfolio with the addition of the leading prostate cancer drug produced by Medivation.

“The proposed acquisition of Medivation is expected to immediately accelerate revenue growth and drive overall earnings growth potential for Pfizer,” said Ian Read, Chairman and Chief Executive Officer, Pfizer. “The addition of Medivation will strengthen Pfizer’s Innovative Health business and accelerate its pathway to a leadership position in oncology, one of our key focus areas, which we believe will drive greater growth and scale of that business over the long-term. This transaction is another example of how we are effectively deploying our capital to generate attractive returns and create shareholder value.” According to the released statement, the deal is “expected to be immediately accretive to Pfizer’s Adjusted Diluted EPS upon closing, approximately $0.05 accretive in the first full year after close with additional accretion and growth anticipated thereafter.” (See also Who Is Driving Pfizer’s Management Team? )

The deal is worth a lot more than the $52.50 a share offer made by France’s Sanofi in April. Medivation shares closed at $67.16 on Friday, pegging its market value at $11.1 billion. The company produces prostate cancer drug, Xtandi, which has already been approved for sale in many countries and is forecasted to generate over $5.7 billion in annual sales by 2020. The firm is also in the process of developing a drug for breast cancer, Talazoparib, and another for called Pidilizumab for the treatment of lymphoma. The latter has the potential to be combined with IO therapies in Pfizer’s portfolio

Pfizer Motivation
Pfizer CEO, Ian Read said in May, that the company has been looking to acquire late-stage pharmaceutical assets as it already has exposure to early-stage drugs. The company’s oncology offerings include breast cancer drug, Ibrance, and other immune-oncology drugs. The $14 billion deal with Medivation will strengthen the CEO Read’s efforts to boost the company’s business. Xtandi is already approved for sales in U.S. and Pfizer will divide its sales with Medivation’s partnered company, Astellas Pharma Inc.

According to Evaluate Pharma, Xtandi, could be one of the top-selling cancer drugs by 2020. On the other hand, the equal prostate-cancer treatment against Xtandi is produced by Johnson & Johnson called as Zytiga. The analysts believe that J&J may pose a threat to Xtandi in the short-run.

After rejecting the French drug maker Sanofi’s offer in April, the firm reached out to more potential buyers such as Pfizer, Gilead Sciences Inc., Celgene Corp. and Amgen Inc. The deal was initially valued at $9 billion consisting of $58 per share in cash and $3 a share as a contingent value right

The current M&A between the drug and biotechnology industry illustrates the future demand for new cancer treatments adding up to patient’s lives and burgeoning revenues of the companies holding the business.

The Bottom Line
Following the takeover talks, Medivation’s share price have appreciated by two folds in the past six months. Medivation’s investors were upbeat with the news as its share price has increased significantly by around 20% in the pre-market trading on Monday.



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