Pfizer to buy cancer drug maker Medivation for $14 billion

Pharmaceutical giant Pfizer has announced a new merger agreement with cancer drug company Medivation in a $14 billion deal that would add the expensive prostate cancer drug Xtandi to its portfolio.

Pfizer’s announcement said the boards of both companies unanimously approved the deal at $81.50 per Medivation share, well above the company’s April offer of $52.50 per share, raising the overall value of the merger from $9.3 billion.

“The proposed acquisition of Medivation is expected to immediately accelerate revenue growth and drive overall earnings growth potential for Pfizer,” Pfizer CEO and chairman Ian Read said. “The addition of Medivation will strengthen Pfizer’s Innovative Health business and accelerate its pathway to a leadership position in oncology, one of our key focus areas, which we believe will drive greater growth and scale of that business over the long-term. This transaction is another example of how we are effectively deploying our capital to generate attractive returns and create shareholder value.”

Pfizer specifically mentioned Xtandi in its press release announcing the deal, touting its $2.2 billion in reported sales over the past year. The drug, with its $129,000 annual price tag, has been the target of groups seeking to lower pharmaceutical costs, with the National Institutes of Health denying a petition to authorize production of a generic version in June.

The press release also mentioned two other cancer drugs in the later stages of development: Talazoparib, a treatment for BRCA-mutated breast cancer, and pidilizumab, “an immuno-oncology asset being developed for diffuse large B-cell lymphoma and other hematologic malignancies.”

Reuters reported the transaction may be a sign of Pfizer changing course. After its $160 billion deal to merge with Allergan was scrapped, due to new government rules limiting the tax benefits of moving headquarters overseas, the company could be looking to improve its portfolio of drugs before making a decision on whether to sell its generic drugs business.