- M&A
- March 14, 2023
- 4 minutes read
Pharma Giant Pfizer To Buy Cancer Drugmaker Seagen For $43B
The biotech sector never stops churning out big mergers & acquisitions. The latest deal from this sector is Pfizer (NYSE:…
The biotech sector never stops churning out big mergers & acquisitions. The latest deal from this sector is Pfizer (NYSE: PFE), the American pharmaceuticals giant, buying Seagen (NASDAQ: SGEN), a biotech company focused on cancer therapies. Pfizer will pay $229 in cash for each share, or $43 billion in total, a 40% premium to Seagen’s share price before rumors of an imminent acquisition began circulating.
- This is the largest deal in the global pharmaceuticals sector since 2019 when AbbVie paid $63bn to buy Allergan, maker of the famous Botox drug.
- Seagen reported roughly $2bn in revenue in 2022 and expects to make $2.2bn in 2023. That means Pfizer is paying over 20x sales, a multiple that’s pretty common in biotech acquisitions.
Pfizer manufactures and markets a portfolio of drugs, but may be best known for its Covid-19 vaccine. That vaccine alone brought in $75bn in revenue in 2021 and 2022, making it Pfizer’s best-selling drug in those years.
Pfizer markets several other drugs that bring in billions of dollars in annual sales, including those targeting cancer. Acquiring Seagen will boost Pfizer’s cancer drug portfolio and help the company grow sales at a time of dwindling demand for its Covid-19 vaccine.
- Pfizer has deployed the windfall from its Covid vaccine to acquire several biotech companies, including $2.3bn for cancer drugmaker Trillium Therapeutics, $6.7bn for immuno-inflammatory drugmaker Arena Pharmaceuticals, $11.6bn for migraine drugmaker Biohaven, and $5.4bn for sickle cell drugmaker Global Blood Therapeutics.
- Seagen is Pfizer’s biggest acquisition since 2021 but not the company’s biggest in history. That title goes to Warner-Lambert, which Pfizer paid $90bn to acquire in 2000, and it still stands as the biggest M&A deal in the modern pharma industry.
Pfizer will fund its Seagen acquisition with $31bn in new debt financing and the rest with cash on hand. The company says it expects Seagen to contribute $10bn in revenue by 2030. “We are not buying the golden eggs. We are acquiring the goose that is laying the golden eggs,” CEO Albert Bourla said in a conference call with investors.
Barring antitrust pushback, the acquisition is expected to close in late 2023 or early 2024.
