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The Pfizer-Medivation Deal, Completed in 3Q16

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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 total enterprise value of ~$14 billion.

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What is Medivation?

Medivation is a California-based biopharmaceutical company. It’s 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

Key highlights of the deal include the following:

  • Medivation is valued at $81.50 per share for Medivation’s common stock.
  • Pfizer completed the acquisition through its subsidiary Montreal.
  • Medivation’s products and pipeline are a strong fit for Pfizer’s Oncology segment.
  • Xtandi is a key product of Medivation for the treatment of advanced prostate cancer in men who do not respond to medical or surgical treatments lowering testosterone. Xtandi is developed in partnership with Astellas Pharmaceuticals.
  • Xtandi reported revenues of $595 million during the last quarter and is expected to be one of the largest-selling oncology drugs by 2021.

The acquisition of Medivation is expected to increase the 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 Medivation’s product portfolio will be a part of innovative health business.

To divest risk, investors can consider ETFs like the Vanguard Health Care ETF (VHT), which has ~6.3% of its total assets in Pfizer, ~2.8% in Allergan (AGN), ~3.9% in Amgen (AMGN), ~2.8% in Bristol-Myers Squibb (BMY), and ~5.3% in Merck (MRK).

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