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Return of the megadeal: Pfizer’s Seagen buy has the industry asking if super-sized M&A is back

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Seagen’s name had been bandied about as a Big Pharma acquisition target for more than a year, fueled by a promising pipeline and high-profile collaborations. Finally on Monday, Pfizer became the suitor M&A predictors were waiting for, announcing it would buy the antibody-drug conjugate specialist in a megadeal worth $43 billion.

Before Pfizer pulled the trigger, Merck had been rumored to be the acquirer of interest for Seagen, but however far those talks reached, the two never agreed on a deal despite a history of collaboration and Merck’s equity stake in the company.

Now, if the Pfizer deal is completed, which is expected by the end of the year or early 2024, the pharma giant will have doubled its early-stage cancer pipeline, Cantor Fitzgerald analyst Louise Chen said in a note this week. And of course, with the size and scale of Pfizer, Seagen’s market reach will get a significant boost, Chen added.


“(We) believe the addition of Seagen will help position us at the forefront of innovative cancer care, and strongly complement our existing portfolio across both hematologic and solid tumors.”

Albert Bourla

CEO, Pfizer


M&A in the pharma sector has been mostly slow since the pandemic began in 2020, but the deal is perhaps a portent of more things to come, particularly for companies like Seagen who operate in the small-to-mid-sized oncology space, Chen said in her note.

The buzz around the Pfizer-Seagen deal overshadowed another major acquisition this week — Sanofi bought immunology and diabetes company Provention Bio for $2.9 billion, bringing the French pharma giant back to the deal table after it lost the bid for Horizon Therapeutics at the end of last year. Amgen won that fight instead by opting in December to shell out $28 billion for the rare disease company.

The fact that pharma companies are finally opening up the purse strings after years of hunkering down could indicate that big M&A deals are more than just a short-term fad.

Seagen’s cancer focus

The acquisition of a mid-sized cancer company like Seagen with a deep pipeline doesn’t come as much of a surprise for those following trends in pharmaceutical M&A — experts have said that this will continue to be the dealmaking focus as companies start dipping their toes back in the water.

And Seagen has a particularly promising slate of therapies that Chen said is “expected to contribute more than $10 billion in risk-adjusted revenues in 2030.” Among these are the approved cancer treatments Adcetris, Padcev, Tivdak and Tukysa — the company has clinical programs for all of these medicines to expand their indication. Additionally, its pipeline includes 11 new potential drugs in the works.

Pfizer is well known as a leader in oncology with bestselling drugs Ibrance, Xtandi and Inlyta contributing to more than $12 billion in cancer treatment revenue in 2022. But the company is facing dreaded patent cliffs for both Ibrance and Xtandi in 2027, and leadership at the pharma giant hasn’t been quiet about the need for dealmaking to make up for that upcoming loss of revenue.

On an analyst and investor call this week, Pfizer CEO Albert Bourla reiterated a goal to add $25 billion in annual revenue by the year 2030 through business development alone. Acquisitions outside of cancer in 2022 included Global Blood Therapeutics and Biohaven Pharmaceuticals — each in the multi-billion-dollar range but a fraction of the size of the Seagen deal, reflecting the priority placed on the oncology space.

Albert Bourla, CEO, Pfizer

Drew Angerer via Getty Images

 

And the Seagen acquisition could pay off right away for Pfizer: The company expects to generate about $2.2 billion in revenue in 2023 at a 12% rate of growth year over year, Bourla pointed out on the call.

“(We) believe the addition of Seagen will help position us at the forefront of innovative cancer care, and strongly complement our existing portfolio across both hematologic and solid tumors,” Bourla said. “The combination of our respective areas of strength and global footprints will allow us to maximize the potential of Seagen’s capabilities and more rapidly advance even more potential breakthroughs to patients with cancers.”

Pfizer’s therapeutic oncology pillars will continue to be breast cancer, genitourinary cancers, hematology and precision medicine that would include lung cancer and colorectal cancer, said Chris Boshoff, chief development officer of oncology and rare disease.

And as the companies combine forces, Bourla said the deal could bring about $1 billion in savings due to conserved operational costs.

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