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Four Key Deals: Analyzing Pfizer’s Impending Growth

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Importance of Pfizer’s recent inorganic growth

Over the past year, Pfizer (PFE) completed multiple acquisitions to restore its top line growth. The four deals that were important for the company included:

  • Hospira acquisition – transaction value of ~$17 billion
  • Anacor acquisition – consideration of $5.2 billion
  • Medivation deal – consideration of $14 billion
  • AstraZeneca’s anti-infective business – consideration of $1.5 billion

With patents expiring for Viagra and Lyrica, these acquisitions would offset the revenue decline and fuel Pfizer’s top line.

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Hospira’s acquisition

With the Hospira acquisition in September 2015, Pfizer expanded its Essential Health business. The deal gave Pfizer access to Hospira’s sterile injectables and biosimilars. Generally, generic sterile injectables offer a higher price than oral drugs due to less competition and the complexity of injectables.

The anticipated 10% growth in generic sterile injectables presented a good opportunity for Pfizer to expand its top line. Other major generic injectable makers include Mylan (MYL), Teva Pharmaceuticals (TEVA) and Sagent. To learn about the market opportunity with the Hospira deal, read Pfizer’s Hospira Deal: Catching Up a Year Later.

Anacor’s acquisition

In June 2016, Pfizer acquired Anacor Pharmaceuticals. The deal enriched Pfizer’s inflammation and immunology portfolio of Innovative Health business. For details on the Anacor deal, read What Investors Should Know about the Pfizer-Anacor Deal.

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Medivation’s acquisition

There was an oncology play in late August 2016—the Medivation acquisition. The acquisition focused on Medivation’s key asset—Xtandi. It has been part of a pricing controversy. Read Will Xtandi Fuel Pfizer’s Top-Line Growth? to understand Xtandi’s pricing controversy.

Anti-infective business acquisition

AstraZeneca’s (AZN) small molecule anti-infective business acquisition was announced on August 24, 2016. The deal enabled Pfizer to expand its Essential Health business. Access to antibiotics such as Merrem/Meronem, Zinforo, and Zavicefta will strengthen Pfizer’s position in anti-infectives. To gain exposure to Pfizer, you could invest in the iShares Dow Jones US Healthcare ETF (IYH). IYH holds 6.9% of its assets in Pfizer.

In the next part, we’ll discuss Pfizer’s divestment related to the Hospira business.

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