Full of money, Pfizer buys Global Blood Therapeutics for $5.4 billion

Aug 8 (Reuters) – Pfizer Inc on Monday agreed to pay $5.4 billion in cash to sickle cell drugmaker Global Blood Therapeutics (GBT.O)as it seeks to capitalize on an increase in revenue from its COVID-19 vaccine and treatment.

Pfizer will pay $68.50 per GBT share, representing a 7.3% premium to its Friday closing price and a nearly 43% premium to Thursday’s closing price after Bloomberg reported that GBT had attracted interest in a takeover. The Wall Street Journal reported Friday that Pfizer was in advanced talks to buy it.

Pfizer’s 2021 revenue of $81.3 billion was almost double that of the previous year, due to sales of COVID-19 vaccines. With the addition of its COVID-19 antiviral pill Paxlovid, Pfizer is expected to generate about $100 billion in revenue this year, but sales of both products are expected to decline in the future.

Pfizer is looking for acquisitions that could generate billions in annual sales by the end of the decade.

“We have very deliberately adopted a diversification strategy in our M&A transactions,” Aamir Malik, Pfizer’s chief dealmaker, said in an interview. He said the company is focused on improving growth for the second half of the decade, rather than big deals that drive value through cost reductions.

“We believe there are opportunities in all of the therapeutic areas in which we are active,” Malik said, noting that the company was agnostic about the size of future deals.

In May, Pfizer struck an $11.6 billion deal with migraine drug maker Biohaven Pharmaceutical Holding. (BHVN.N) and recently entered into a $6.7 billion deal to buy Arena Pharmaceuticals.

With the acquisition of Global Blood Therapeutics, Pfizer adds the sickle cell treatment Oxbryta, which was approved in 2019 and is expected to surpass $260 million in sales this year. It will also pick up two assets from the pipeline – GBT601 and inclacumab – targeting the same disease.

Pfizer said if they are all approved, it believes GBT’s drugs could generate more than $3 billion in sales a year at their peak.

Sickle cell disease is an inherited blood disorder that affects approximately 70,000 to 100,000 people in the United States.

GBT CEO Ted Love said Pfizer’s multinational resources and infrastructure will allow the company to launch Oxbryta in other markets and drive adoption.

“We really don’t have any infrastructure outside of that (US and Western Europe) and it takes time and money to build that infrastructure and Pfizer already has all of that,” Love said.

Shares of Global Blood rose 4.5% after the deal was announced. Pfizer shares closed slightly at $49.41 apiece on Monday.

Reporting by Mrinalika Roy in Bengaluru; Editing by Shinjini Ganguli, David Evans and Lincoln Feast.

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