Pfizer signs $43bn Seagen deal

March 13 (Reuters) – Pfizer Inc ( PFE.N ) struck a roughly $43 billion deal on Monday for Seagen Inc ( SGEN.O ) to expand its portfolio of cancer treatments as the drugmaker braces for a steep drop in COVID- 19-product sales and loss of exclusivity for some top sellers.

The deal, Pfizer’s largest in a string of acquisitions following a once-in-a-lifetime cash windfall from its COVID-19 vaccine and pill, will add four approved cancer therapies with combined sales of nearly $2 billion by 2022.

Pfizer will pay $229 in cash per Seagen share, a 32.7% premium to Friday’s closing price. The offer is also a nearly 42% premium to the stock’s close on Feb. 24, a day before the Wall Street Journal first reported a possible deal.

Seagen’s shares rose to $207 before midnight Monday.

Pfizer has hit the deal route in its quest to cushion the impact of a projected $17 billion drop in revenue by 2030 due to patent expirations on top drugs and falling demand for its COVID products.

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“While Pfizer still has more deal-making firepower, we think integrating such a large company could cause (Pfizer) to take a break on the M&A front,” Wells Fargo analyst Mohit Bansal said in a research note.

The drugmaker expects more than $10 billion in “risk-adjusted” sales from Seagen by 2030.

Washington-based Seagen is a pioneer in antibody-drug conjugates (ADCs), which act as “guided missiles” designed for a targeted destructive effect, sparing healthy cells.

Pfizer’s portfolio of oncology treatments includes 24 approved drugs, including breast cancer treatment Ibrance.

The companies expect to complete the deal in late 2023 or early 2024.

The deal is unlikely to face major competitive challenges since the companies don’t have major overlapping products, Bansal said, but they could still be scrutinized because of its size.

Pfizer rival Merck & Co Inc ( MRK.N ) and Seagen were in advanced deal talks last year, but that reportedly broke down over fears of tough cartel scrutiny.

Reporting by Manas Mishra and Bhanvi Satija in Bengaluru; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila

Our standards: Thomson Reuters Trust Principles.

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