Pfizer’s next wave should cause ripples of concern

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It would surely be premature to suggest that Pfizer is turning its back on risk, but its move to buy NextWave Pharmaceuticals should raise eyebrows. And not in a good way.

It is strange that the world’s biggest pharmaceutical firm is taking a foray into ADHD – a niche, extensively genericised market – especially given the $225m price tag. Coming as it does after several acquisitions of specialty pharma businesses and the dipping of a toe into rare diseases it must raise the question as to whether bubble mania has effectively priced biotech assets out of the market.

The trigger for Pfizer’s $225m move was clearly the recent approval of NextWave’s Quillivant XR, a methylphenidate formulation that the companies say is the first once-daily liquid ADHD treatment in the US. This is to be launched in January, shortly after the takeover closes, and a further $425m is payable by Pfizer should sales targets be hit.

UBS analysts said they were surprised by the “speciality pharma-like acquisition ... not to mention that the deal is on the expensive side”. They said the focus remained on tofacitinib’s November 21 PDUFA data and Pfizer's animal health divestment.

Effervescent vitamin supplements

No doubt this should be the focus, and investors would be right to ask just what Pfizer is playing at. In January it bought Alacer, a private maker of effervescent, powdered mix vitamin supplements, and its last significant M&A move was the $3.6bn purchase of King Pharmaceuticals – an analgesia specialist.

There seems to be a pattern here, dating back at least three years to Pfizer’s Gaucher’s disease deal with Protalix BioTherapeutics. Until then rare diseases had been the domain of small and mid-size speciality players, like the UK’s Shire.

Shire also dominates the ADHD field, and could now find itself assaulted by Pfizer on two fronts. But why Pfizer should now be trying to shake up niche markets by launching price wars is a mystery.

Of course, from big pharma’s point of view it might just be that there are no quality assets left to buy in the traditional, high-risk drug development space – or at least not at the right price. Expect this to change once the biotech bubble bursts.

To contact the writer of this story email Jacob Plieth in London at jacobp@epvantage.com

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