Published: Tue, August 23, 2016
Economy | By Melissa Porter

Pfizer buying Medivation in deal valued at about $14B

That's a 21 percent premium to the San Francisco biotech's Friday closing price of $67.19.

The planned purchase of Medivation, with its $2.2 billion-a-year Xtandi, is the latest in a number of deals by large drugmakers willing to pay top dollar for cancer drugs that are more effective than standard, older treatments.

Some have suggested that the death of the Allergan deal could lead Pfizer to split up into smaller companies. Medivation shares ended trading in NY on Friday at US$67.16.

As The Financial Times reports, Pfizer has been slower than some of its competitors to develop cancer drugs and lost out to AbbVie in the race to buy Pharmacyclics a year ago. The deal is expected to be paid for by Pfizer in its entirety, or at least mostly, with cash, one of the people said.

A year ago, Pfizer paid $15 billion for Hospira, which sells generic hospital products and is developing biosimilars meant to compete with big-selling injectable biotech drugs.

Pfizer expects the acquisition will build upon its success with the breast cancer drug Ibrance and transform it into "a leading oncology company".

"The proposed acquisition of Medivation is expected to immediately accelerate revenue growth and drive overall earnings growth potential for Pfizer", Ian Read, Pfizer chief executive, said in a statement. Researchers also are studying Xtandi as a possible treatment for earlier-stage prostate cancers.

Pfizer said Monday that it will pay $81.50 per Medivation share.

Other companies, including Sanofi SA, Gilead (NasdaqGS: GILD), Celgene (NasdaqGS: CELG) and Merck (NYSE: MRK), have also shown interest in acquiring Medivation, reports Meg Tirrell for CNBC. And company shares have begun to climb after years in the doldrums.

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