Pfizer (PFE 2.20%) is one of the most successful pharmaceutical companies ever. In 2022, it brought in more than $100 billion in revenue -- a record for itself and for the entire industry. Of course, a lot of this was due to an unprecedented situation -- the COVID-19 pandemic -- and two products to address it: Pfizer's coronavirus vaccine and treatment.
As demand for these treatments dropped in later pandemic times, though, it was clear Pfizer needed a new growth driver. And the big pharma company announced that a key driver of that growth would be oncology drugs. To increase its presence in that area, Pfizer last year acquired oncology specialist Seagen, a company focused on antibody-drug conjugates (ADCs). These allow for the delivery of potent treatments directly to tumor cells, in order to limit damage to normal cells.
This week, Pfizer reported second-quarter earnings; this marks its second full quarter of earnings that include Seagen products. Is Pfizer winning its $43 billion bet on the oncology specialist? Let's find out.
Image source: Getty Images.
The Seagen acquisition
First, a few details about the Seagen acquisition: Pfizer announced this $43 billion purchase early last year and completed the operation in December. At the time of the announcement, Pfizer said Seagen was expected to contribute more than $10 billion in risk-adjusted revenue in 2030.
The Seagen purchase came with four approved treatments. Three are ADCs: Padcev for advanced bladder cancer, Adcetris for Hodgkin lymphoma, and Tivdak for cervical cancer. Seagen also brought Tukysa, for a certain form of breast cancer. Including these four, Pfizer's oncology portfolio holds more than 25 approved medicines -- and nine of these are blockbusters or have blockbuster potential. The deal also doubled Pfizer's oncology pipeline, which could result in significant growth down the road as candidates reach the finish line.
Pfizer aims to launch eight or more oncology blockbusters by 2030, and to double the number of cancer patients treated with the company's drugs.
Now let's see how Pfizer is progressing when it comes to growth from the Seagen portfolio. If we look at Seagen's second-quarter product revenue from last year and compare it to Pfizer's second quarter of this year, we can see that all four drugs have increased revenue year over year. Padcev, in particular, posted a significant jump, advancing more than 144% to $394 million in revenue in the recent quarter. Pfizer says this treatment is progressing toward becoming the standard of care for patients with locally advanced or metastatic bladder cancer.
The growth opportunity
This is all positive, and the Seagen integration is just getting started. With the exception of Adcetris, Seagen's products are relatively new to the market; they've launched within the past few years, so Pfizer has plenty of opportunity to grow market share and sales. On top of this, the pipeline and the high retention rate of talent from Seagen should result in additional important drugs down the road.
Now let's get back to our question: Is Pfizer winning its big bet? The world burden of cancer is growing, according to the World Health Organization -- and about 1 in 5 people develop cancer in their lifetimes. The oncology drug market, expanding at a compound annual growth rate of more than 11%, is expected to reach about $462 billion by the early 2030s, according to a Precedence Research report. So Pfizer is addressing a growth market that's in need of more options.
Seagen's drugs are showing they have what it takes to offer growth. We'll see to what extent they can deliver in the coming quarters, but the first signs are positive. Meanwhile, the addition of the Seagen pipeline is another plus, though it will take a few years to see its impact as candidates progress through the development process.
Pfizer hasn't yet won its Seagen bet, but considering what we've seen so far, it's on track to do so. And that's great news for investors who decide to buy the stock today and hold on for the long term.
