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A Look at the Pfizer-Medivation Deal

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Pfizer-Medivation deal

On September 27, 2016, Pfizer (PFE) completed the acquisition of Medivation (MDVN). The stock transaction is valued at $81.50 per Medivation share, resulting in a total enterprise value of ~$14 billion.

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What is Medivation?

Medivation is a California-based biopharmaceutical company. It is focused on developing and commercializing innovative therapies for the treatment of serious diseases that presently have a limited scope of treatment.

Key highlights of the deal

The key highlights of the deal were as follows:

  • Medivation’s common stock is valued at $81.50 per share
  • Pfizer completed the acquisition through its subsidiary, Montreal
  • Medivation’s products and pipeline are a strong fit for Pfizer’s oncology segment
  • Medivation’s key product, Xtandi, for the treatment of advanced prostate cancer in men, reported revenues of $595 million during the last quarter and is expected to be one of the best-selling oncology drugs by 2021
  • the Medivation acquisition is expected to increase near-term revenue growth for the innovative pharmaceuticals business segment

The transaction will also preserve the potential separation of the Innovative Health and Essential Health businesses, and the Medivation products portfolio will be a part of the Innovative Health business.

To divest risk, investors could consider ETFs such as the iShares US Healthcare ETF (IHE), which has an ~8.5% exposure to Pfizer. IHE holds ~10.2% of its investments in Johnson & Johnson (JNJ), ~8.4% in Merck and Co. (MRK), and ~5.5% in Bristol-Myers Squibb (BMY).

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