Potential Pfizer-Seagen Tie Up Could Mark Largest Deal in Years, Continue to Propel Biopharma M&A Trend

A potential acquisition of Seagen by Pfizer, likely in the neighborhood of $40.0 billion, would be the biggest biopharma deal in several years, easily surpassing 2022’s largest acquisition: Amgen’s purchase of Horizon Therapeutics for $28.3 billion. Though Seagen’s talks with Merck for a similar deal fell through last summer, Pfizer has been among the most prolific M&A buyers recently and will need need to continue expanding their suite of lucrative products to keep growing after generating record revenue last year.

Many biopharma companies are facing a similar hurdle, particularly due to an oncoming wave of patent cliffs that is set to sweep over the industry across the next several years. With cash balances still filled to the brim and valuations of many potential targets still suppressed, the time seems right for biopharma M&A activity to continue the recovery that kicked off in the latter half of 2022.

Related ETF: VanEck Pharmaceutical ETF (PPH)

Biopharma M&A’s largest deal of the year may be on the table this morning, following reporting from the Wall Street Journal that indicates Pfizer Inc. is in talks to acquire biotech firm Seagen Inc., which carries a promising class of targeted cancer therapies. Before acquisition talks were reported, Seagen’s market capitalization was near $30.0 billion, as its stock price closed at just over $161.00 per share on Friday, and management would likely command a premium well over that.

MRP covered the potential for a similar deal last year between Seagen and Merck, which could have been worth $40 billion if Merck had followed through a rumored $200.00 per share price point. Though those talks were said to have reached advanced stages, the negotiations fell apart at some point in the summer. Pfizer appears to be a more serious buyer, as they were the purchasing party in two of the top three largest pharma M&A deals last year, each worth $11.6 and $5.4 billion. The company also still holds $36 billion on its balance sheet, following a year of record revenue in 2022 – largely derived from their COVID-19 vaccine and other pandemic-related offerings that helped the company secure bulk order contracts with the government. With vaccines now going to the private market and new COVID cases continuing to roll over, Pfizer is going to have to bulk up its portfolio and pipeline to keep growing moving forward.

Pfizer’s executives are among a consortium of biopharma heads that have recently spoken about a desire to increase their dealmaking  with outside companies. Pfizer has set a goal of adding $25 billion in revenue by 2030 from business-development moves including acquisitions. The moves could…