Pfizer bets big on Medivation's cancer drug Xtandi but we'll all be paying the price
Drugs giants are paying huge premiums to buy up treatments. We'll be expected to provide the returns they're seeking through higher healthcare costs
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.After spending the last couple of years hunting down deals designed to lower its tax bill (it failed) US pharmaceutical giant Pfizer has changed tack and is back buying drugs again.
The company has announced that it is to pay $14bn (£10.7bn) to buy Medivation, the main reason being that it wants to get its hands on blockbuster prostate cancer drug Xtandi, although there are a couple of other experimental treatments waiting in the wings.
It’s just possible that a counter-bidder could try to crash the party. When Medivation put itself up for sale it created the sort of fight you’ll have seen during the Olympic open-water swimming competition. Pfizer’s French rival Sanofi, which got the party started, will be feeling particularly bruised at the outcome.
However, the reaction of Medivation's share price – it was just a smidgeon below Pfizer's offer price in pre-market trading – suggests that Pfizer will get the gold.
It isn’t gold that Medivation will be expected to produce, it’s green, billions of green dollar bills. Not to mention Euros, and Pounds, and, well, insert your currency of choice here. It’ll have to to justify the blockbuster price Pfizer is paying for its blockbuster drug.
Big pharmaceutical companies have struggled to create treatments of their own in recent years so they’ve been busily buying up those produced by others. Even loss-making little biotechs with potential have fetched huge sums. Profitable companies with blockbusters that are actually on the market like Medivation are in another league, hence the huge takeout price.
The $81.50 a share Pfizer is proposing to pay is more than double the level the shares were trading at before Sanofi got the ball rolling with an opening bid of $52.50, which led to Medivation putting itself up for sale.
It isn't only Pfizer that is paying a heavy price for the current difficulties the pharameutical industry is having when it comes to developing new super treatments. It’s us. Pfizer and the other drugs giants will be expecting high returns from having committed so much capital to buying up companies like Medivation.
We will be expected to provide those returns through our taxes or through the price we pay for health insurance, depending on the system used to provide healthcare where we live.
This deal, like the string of recent pharma deals, will help to turbocharge healthcare cost inflation. But that’s the free market for you.
Still think it’s a good idea?
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments