Pfizer CEO on the Prowl for New Acquisitions

July 29, 2015
By Mark Terry, BioSpace.com Breaking News Staff

In a Tuesday conference call with analysts, Ian Read, chief executive officer of Pfizer , indicated the company was again hunting for acquisition targets.

“There are always opportunities and we stand ready,” said Read. “I’m optimistic that we have sufficient courage to find those opportunities in the marketplace.”

Read’s statements only confirm what most people have suspected since the company’s May 2014 bid for British drug company AstraZeneca PLC fell apart. Toward the end of 2014, analysts were speculating that Pfizer would take another bid for AstraZeneca after the six-month cooling-off period ended. There were also rumors that Pfizer might take a shot at GlaxoSmithKline or Dublin-based Actavis .

In August of 2014, Pfizer announced a collaboration agreement with Illumina, Inc. (ILMN), to develop its next-generation sequencing (NGS) platform for companion diagnostics that would be usable across AstraZeneca’s oncology portfolio.

In February of this year, Pfizer announced it would acquire Lake Forest, Ill.-based Hospira, Inc. for approximately $17 billion. Hospira develops and markets injectable drugs and infusion technologies, and employs 19,000 people globally. This was a seemingly small deal compared to the $119 billion the company was offering for AstraZeneca.

Pfizer is currently operating as essentially two separate companies, Innovative Products and Established Products. At the end of 2016, the company is expected to make a decision on whether to completely split the company into two. Only last week Mad Money’s Jim Cramer recommended that Johnson & Johnson (JNJ) split into three separate companies in order to more focus their business units and drill down on specific customer bases.

In the company’s second quarter earnings statement, Pfizer reported $11.853 billion in reported revenue in 2015, down about 7 percent from $12.773 billion in the same quarter in 2014. The six-month figures also show a 6 percent decrease, from $24.126 billion in 2014 to $22.717 billion in 2015. The company also adjusted its 2015 financial guidance, indicating expected reported revenues of $45 to $46 billion, up from previous guidance of $44 to $46 billion.

“Overall, I am very pleased with our second-quarter 2015 financial results,” said Frank D’Amelio, Pfizer chief financial officer in a statement. “We were able to grow revenues by one percent excluding the impact of foreign exchange, marking the third consecutive quarter of operational revenue growth, despite the continued significant negative impact from product losses of exclusivity, primarily Celebrex and Zyvox in the U.S. and Lyrica in certain developed Europe markets.”

With the focus on potential Pfizer acquisitions, it was pointed out that in June Pfizer made a deal with GlaxoSmithKline to buy GSK’s quadrivalent meningitis ACWY vaccines, Nimenrix and Mencevax, for $130 million. Although not expected to make a big impact on the company’s 2015 financial performance, it adds “two high-quality and complementary vaccines to Pfizer’s portfolio, allowing the company to reach a broader global population.”

In April, it also acquired a minority equity interest in AM-Pharma B.V., a privately held Dutch biopharmaceutical company that focuses on recombinant human Alkaline Phosphatase for the treatment of inflammatory diseases. Pfizer paid $87.5 million for both the exclusive option and the minority equity interest. There may be additional payments up to $512.5 million if Pfizer exercises the option and any potential product launches.

Of the company’s recent quarterly report, Vamil Divan, an analyst at Credit Suisse said to the Financial Times, “Overall, we expect investors to view the performance this quarter as a positive, but still expect much of the focus to be driven by … further business development efforts and views on a potential future split of the company.”

Of the challenge of a major acquisition, D’Amelio said in an interview with Bloomberg Business,“It’s something that I consider a core competency of the company — we’re good at it. One of the nice things about Pfizer is we have the capacity to do any size deal that we want.”