Pfizer's Growth Strategy: Turning to Smaller M&As

Pfizer's Growth Strategy: Turning to Smaller M&As July 6, 2016
By Alex Keown, Breaking News Staff

NEW YORK – After its $160 billion inversion deal with Allergan fell through, Pfizer has continued an aggressive mergers and acquisitions strategy, but this time with a focus on smaller companies that point to high growth and could signal, as Bidnessetc notes, the future of a possible breakup of the drugmaker’s Established Products busines—Pfizer Essential Health.

Since the deal with Allergan fell through after intervention of the U.S. government, Pfizer has continued to build its portfolio through M&A activity. Most recently, the company made a $20 million “stalking horse” bid for a large chunk of Massachusetts-based Bind Therapeutics ’ assets. Pfizer is interested in Bind’s accurin technology to support its burgeoning oncology business.

In addition to the offer for Bind Therapeutics, Pfizer has also authored several other deals. Pfizer recently acquired Palo Alto, California-based Anacor Pharmaceuticals for $5.2 billion. As a result of that acquisition, Pfizer gained Anacor’s lead project, crisaborole, a non-steroidal topical PDE4 inhibitor to treat mild-to-moderate atopic dermatitis, more commonly known as eczema. In May, Pfizer struck a deal with Cambridge, Massachusetts-based WAVE Life Sciences to develop up to five programs from discovery to clinical candidate selection.

Another company being eyed for aquisition is California-based Acadia, following the approval of its drug, Nuplazid (pimavansrin), for the treatment of Parkinson’s psychosis. Pfizer has been one of the companies rumored to take an interest. Pfizer has its own Parkinson’s disease drug in Phase II development and Nuplazid could provide a solid support for that drug.

The acquisition of smaller companies will provide a boost to Pfizer’s pipeline as the company seeks to generate new revenues by focusing on the burgeoning oncology market in the wake of a recent decline in revenue.

While Pfizer has focused on smaller companies, that does not mean Pfizer isn’t ignoring large companies. In late June, there were reports that Pfizer was eying California-based Amgen and its growing oncology portfolio that includes Xgeva, Prolia, Kyprolis, Vectibix and Blincyto. Those oncology drugs would be a good fit with Pfizer’s plans to split off its oncology line into a standalone company. However, it is not known at this time if Amgen is a legitimate target for Pfizer, particularly as the company looks at breaking up into smaller entities.

Pfizer has been exploring a possible breakup for some time and anticipates making a decision later this year. If the company does split, Pfizer could be comprised of three units—Global Innovation Products, Vaccines Oncology and Consumer.

Last year, Ian Read, chief executive officer of Pfizer, said a decision would likely be made by the end of 2016. He reiterated that earlier this year after the Allergan deal fell through.

More recently, in June Chris Schott, an analyst at J.P. Morgan told BioSpace that three years of audited financial statements (2014-2016) are required before any part of Pfizer could be spun off.

“We also see 2017 as an attractive time for action as investors see Pfizer’s innovative pipeline clearly contributing to growth and the established business having transitioned to a more stable profile,” Schott said.

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