AstraZeneca Sells Antibiotics Business to Pfizer
There was big news in the pharmaceutical industry today as multinational giant Pfizer purchased a portion of AstraZeneca’s antibiotics business.
The deal is reportedly worth up to $1.575 billion plus royalties. Pfizer will pay Astra $550 million upfront, according to The Wall Street Journal, along with an unconditional $175 million in January 2019. A further $850 million plus royalties may be owed depending on the progress and commercial success of the drugs involved in the deal.
Pfizer Inc. is specifically buying the rights to three approved antibiotics drugs and two drugs that are currently undergoing clinical trials. The deal would allow Pfizer to sell those drugs in most markets outside the United States and Canada. Allergan PLC, meanwhile, holds the North American rights to four of the five drugs (Merem is the one exception for which Pfizer will receive the North American rights).
The Deal Does Not Include Astra’s Biggest Portfolio of Drugs
The most important part of this deal is the fact that Astra is not selling its portfolio of biological anti-infective drugs, nor the business it put on the back burner last year to focus on the development of early-stage antibiotics.
Pfizer believes the deal will boost the inventory of older products available through the company, some of which have lost patent protection over the years. Under Pfizer’s control, the antibiotics will “reach greater numbers of patients around the world”, according to Luke Miels, executive Vice President for Europe and head of antibiotics at Astra.
Pfizer left the antibiotics business a few years ago – one of several major pharmaceutical companies to jump ship from the industry. Pharmaceutical giants stopped making antibiotics after a string of failed projects which earned dismal returns on investment.
The fundamental problem with antibiotics is that they need to be used sparingly to preserve their effectiveness – but using them sparingly means sales will be permanently low. It’ a catch 22 situation.
Meanwhile, governments around the world are trying to find ways to incentivize pharmaceutical companies to continue making antibiotics. There’s been a surge of antimicrobial resistance that threatens the future of global health.
In any case, Pfizer currently has 60 anti-infective and antifungal medicines under its portfolio.
Astra Will Focus on Its Core Pharmaceuticals
Astra’s sale of its antibiotics drugs to Pfizer is one part of the company’s new externalization strategy, which it’s offloading non-core drugs to other pharmaceutical companies.
Meanwhile, the Swedish-British company AstraZeneca will focus on the company’s core therapy areas of cardiovascular and metabolic disease drugs along with respiratory, inflammatory, and autoimmune conditions.
Neither AstraZeneca’s nor Pfizer’s stock changed significantly on the news, with both stocks nudging up by under half a percentage point at the time of writing.
