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What Kind of Deals Is Pfizer Planning for the Next Few Years?

By Keith Speights - Jan 24, 2021 at 6:10AM

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Pfizer CEO Albert Bourla knows what he wants.

Pfizer (PFE 1.38%) has a long and storied history of deal-making. And the big drugmaker's business development activities aren't likely to fall by the wayside in 2021. In this Motley Fool Live video recorded on Jan. 13, 2021, Healthcare and Cannabis Bureau Chief Corinne Cardina and writer Keith Speights discuss what kind of deals to expect from Pfizer over the next few years.

Corinne Cardina: Let's move on to number 3 of the stocks we are diving into, Pfizer. Of course, far in a way, this is the biggest and the oldest of the three. Pfizer's market cap, almost $209 billion, founded more than 150 years ago, hugely diversified. Today it's headquartered in New York City.

Compared to the stocks we've discussed, this one really didn't change much in 2020. Totally flat, underperformed the S&P, which was actually up 16 percent year for the year. We'll talk more about why its stock didn't really react positively to getting the first authorized COVID vaccine. But let's start with defining its underlying business. What are Pfizer's main blockbuster drugs?

Keith Speights: They have quite a few, Corinne. Eliquis, a blood thinner. Now, they do partner with Bristol Myers Squibb (NYSE: BMY) on it, so they do share some of the revenue there. But a massive winner, multi-billion-dollar drug that continues to grow and sell. It's one of their biggest winners.

They have a breast cancer drug, Ibrance, that's doing quite well. They have another vaccine, pneumococcal vaccine Prevnar 13. Sales for it slipped a little bit in the last quarter, but it's still a mega-blockbuster, a huge winner.

They have Xeljanz, which addresses several autoimmune diseases such as rheumatoid arthritis, psoriatic arthritis, ulcerative colitis, and there are quite a few more. This company is loaded with blockbusters in its lineup.

Corinne Cardina: It is. The big news of last year, beyond the COVID vaccine, of course, was that they actually spun off their unit called Upjohn. It is now Viatris (NASDAQ: VTRS), merging with Mylan. I'll throw the ticker in the chat. But they are targeting higher growth now that they have completed this deal. They actually gave an M&A strategy update at JP Morgan Healthcare Conference. Keith, what have we learned from that?

Keith Speights: Well, it's no surprise that Pfizer is still in the market for acquisitions. [laughs] That has been their modus operandi for quite a long time.

Pfizer's CEO, Albert Bourla, said that they're looking to potentially acquire phase 2, phase 3 candidates that could hit the market in the 2025-2027 time frame. They are focusing on the areas that they're already big winners in: oncology, the rare disease market, inflammation and immunology, vaccines. They're looking at their strong suit, where their strengths lie.

They're looking to bolster their pipeline. This isn't a surprise whatsoever. Now, Bourla is saying they're looking at these mid- to late-stage candidates. But he did take that never-say-never approach that they could do a bigger deal or maybe go outside of their wheelhouse, look at some other therapeutic categories if the right deal came along.

I think you'll see Pfizer, though, focused on exactly what he was saying. I think they're going to focus on candidates, the individual candidates that over the next 5-7 years could make a difference on their bottom line. They certainly are in a good position to scoop up some of those potential candidates out there.

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