In the largest pharma acquisition in four years, Pfizer has picked up oncology biotech Seagen for USD 43 billion. The deal, which could signal a rebound in M&A activity as big pharma companies look to renew their pipelines in preparation for post-COVID and off-patent losses, bolsters Pfizer’s continuing push into the cancer space.


An M&A Comeback?

Organic growth from internal R&D can only go so far, which means looking outside for inorganic growth via acquisitions

David H. Crean, Managing Partner for Cardiff Advisory

After a challenging year for biopharma mergers and acquisitions (M&A) that saw both a decline in deal value and volume, M&A activity could be poised to bounce back in 2023. If PWC’s predictions are correct, M&A could more closely resemble previous years with a total deal value between USD 225 billion to USD 275 billion.

Despite macroeconomic headwinds, several companies are looking to spend their COVID-19 earnings on filling in pipeline gaps and preparing for the patent losses on key revenue drivers.  In the view of PharmaBoardroom contributor David H. Crean,“Big pharma and large-cap biotech companies are sitting on loads of cash on their balance sheet and almost all have varying needs for near- and long-term growth. Organic growth from internal R&D can only go so far, which means looking outside for inorganic growth via acquisitions — often from the ranks of small and mid-sized biotech.”

“In the longer perspective, companies may unleash their [M&A] firepower [in the next 12 months], not just to bring new innovation into their portfolios, but to access the tech and data tools that can transform and improve their entire operating models,” says Subin Baral, EY Global Deals Leader, Life Sciences.

Pfizer’s acquisition of Seagen is by far the largest deal the industry has seen since AbbVie purchased Allergan for USD 63 billion and Bristol Myers Squibb bought out Celgene for USD 74 billion in 2019, yet other companies have also been striking deals that suggest an upswing in M&A activity. Amgen acquired rare and rheumatic diseases biotech Horizon Therapeutics for USD 28.3 billion at the end of last year while French giant Sanofi struck a deal to buy Type-1 diabetes specialist, Provention Bio, for USD 2.9 billion.


Pfizer’s Post-COVID Plans

With respect to Pfizer, there has been much speculation about the company’s post-COVID strategy after sales of its vaccine and antiviral pill drove the company’s 2022 revenue to a record USD 100 billion, although those revenues are set to plunge this year. If recent acquisitions are any indication, M&A looks to be an important component of the company’s plans going forward.

Already in 2021, when major COVID profits started coming in, the company made two strategic acquisitions of cancer-focused companies, Arena Pharmaceutical, for USD 6.7 billion, and Trillium Therapeutics, for USD 2.3 billion. Pfizer then continued its buyouts last year, seizing migraine specialist Biohaven for USD 11.6 and going on to purchase sickle cell company Global Blood Therapeutics for USD 5.4 billion.


A Focus on Oncology

Oncology continues to be the largest growth driver in global medicine, and this acquisition will enhance Pfizer’s position in this important space

Albert Bourla, CEO, Pfizer

With the acquisition of Seagen, a pioneer in antibody-drug conjugates (ADC), a targeted therapy that attacks cancer cells without affecting healthy cells, Pfizer will, in the words of CEO Albert Bourla,  “accelerate the next generation of cancer breakthroughs and bring new solutions to patients by combining the power of Seagen’s antibody-drug conjugate (ADC) technology with the scale and strength of Pfizer’s capabilities and expertise.”

Having Seagen onboard will enable Pfizer to sharpen its focus on oncology. With a portfolio of 24 approved cancer drugs, as well as 33 programmes in clinical development, Pfizer says sales from its existing oncology portfolio generated USD 12.1 billion in 2022, but there is room for tremendous growth. “Oncology continues to be the largest growth driver in global medicine, and this acquisition will enhance Pfizer’s position in this important space and contribute meaningfully to the achievement of Pfizer’s near- and long-term financial goals,” Bourla continued.

Pfizer had big expectations for Seagen, projecting a significant contribution to future revenues. “Seagen expects to generate approximately USD 2.2 billion of revenue in 2023. When combining the expected strong growth trajectories for these medicines with candidates that could emerge from Seagen’s pipeline, subject to clinical trial and regulatory success, Pfizer believes Seagen could contribute more than USD 10 billion in risk-adjusted revenues in 2030,” the company release stated.


Keeping the US’s IRA in Mind

According to Bourla, Pfizer had the US’s new Inflation Reduction Act (IRA) and the Medicare price negotiations it entails in mind when moving to purchase Seagen. Speaking on an investors call, Pfizer’s CEO claimed that under the new legislation more seniors will be able to access expensive cancer drugs, like Seagen’s, which have list prices of over USD 100,000 per year, with the USD 2,000 out-of-pocket Medicare cap included in the bill. In addition, all of Seagen’s currently marketed drugs except for one are biologics, which translates into 13-year exclusivity as opposed to 9 for small molecule drugs under the IRA.