Pfizer to buy AstraZeneca antibiotics business for $725m

New York-based Pfizer has been looking for ways to bolster its pipeline after two failed attempts at a major acquisition, first with AstraZeneca in 2014, then with Allergan

AstraZeneca’s portfolio will add to more than 60 anti-infective and anti-fungal medicines that Pfizer sells (Joe Raedle/Getty)

Drugs giant Pfizer agreed to buy an antibiotics business from UK firm AstraZeneca for $725m (£547m) as well as other payouts, settling for one piece of a company it once tried to acquire.

Pfizer will pay $550m (£415m) to AstraZeneca when the transaction closes and make another payment of $175m (£132m) in January 2019, according to a statement Wednesday. In addition, AstraZeneca is eligible to receive as much as $250m (£188m) in milestone payments, up to $600m (£453m) in sales-related payments, as well as certain royalties.

New York-based Pfizer has been looking for ways to bolster its pipeline after two failed attempts at a major acquisition, first with AstraZeneca in 2014, then with Allergan this year. The US drugmaker this week agreed to buy Medivation in a $14bn (£10bn) deal.

AstraZeneca, meanwhile, has been shoring up its declining revenue by selling off products that aren’t central to its business, enabling investment in focus areas like cancer research. The London-based drugmaker sold its aneasthetics medicines, another non-essential area, to Aspen Pharmacare Holdings in June. Revenue from such “externalisation,” as the company calls it, was $1.1bn (£76m) last year, and AstraZeneca has said it would generate more than that this year.

Shares of AstraZeneca fell 0.7 per cent to 5,027 pence on Wednesday. The stock has risen 8.9 per cent this year. Pfizer closed Tuesday in New York at $35.09 (£26.51) a share, up 0.7 per cent.

Pfizer is buying rights to several of AstraZeneca’s experimental and approved antibiotics in global markets outside the US, including Zavicefta, which is used to treat severe bacterial infections resistant to other drugs – an area of growing need.

The transaction will give Pfizer rights to three medicines already on the market, including Zavicefta, which was approved by the European Commission in June. It also gives Pfizer two drugs that are still in clinical development, including one to treat methicillin-resistant staphylococcus, or MRSA, infections.

AstraZeneca’s portfolio will add to more than 60 anti-infective and anti-fungal medicines that Pfizer sells, said John Young, group president at Pfizer Essential Health, in the statement.

AstraZeneca is “pleased that our strong science in antibiotics will continue to serve a critical public health need through Pfizer’s dedicated focus on infectious diseases,” said Luke Miels, executive vice president for Europe, in the statement.

The deal doesn’t include biotechnology products in development at AstraZeneca’s MedImmune unit, or AstraZeneca’s stake in Entasis Therapeutics, a company developing new small-molecule anti-infectives.

Bloomberg