Amid resentment following the crackdown on mergers and acquisitions by the US Federal Trade Commission, US pharmaceutical giant Pfizer said taking such action would be a “disaster” for the innovation system that underpins the pharmaceutical industry.
Pfizer stressed that mergers and acquisitions are only an “important part” of the financing system that supports the development of innovative treatments by scientists.
In this context, the British newspaper “Financial Times” quoted William Bowe, the company’s chief development officer, commenting on the impact of the tightening of the anti-monopoly regime on the sector: “I think it will be a disaster for the system,” adding that “if you cannot obtain merger and acquisition deals, It definitely stifles innovation.”
The remarks came after the US Federal Trade Commission yesterday filed a lawsuit to block a $28 billion deal under which Amgen Pharmaceuticals would acquire Horizon Pharmaceuticals. This was the first time in more than a decade that the competition regulator sought America to stop a deal in the pharmaceutical sector.
Analysts warn that the US Federal Trade Commission’s action threatens to upend a decades-old business model for big pharma companies, which often rely on buying small and medium-sized biotech groups to revamp their drug pipelines.
The newspaper quoted Matt Phipps, an analyst at investment bank “William Blair” as saying, “The filing of a lawsuit by the Federal Trade Commission to block this deal will reduce enthusiasm for mergers and acquisitions in the biotechnology sector.”
Several analysts said Pfizer’s proposed $43 billion purchase of Sign, announced in March, could also come under threat from the FTC.
Speaking at the Financial Times US Medicines and Biotechnology Summit in New York, Bao said he was confident the Federal Trade Commission would approve the Seegen deal.
Pfizer raised $31 billion in a massive bond sale that will help fund the acquisition.
Earlier in the conference, Amgen CEO Robert Bradway expressed confidence that his company would succeed in finalizing its acquisition of Horizon despite opposition from the Federal Trade Commission.
Both Amgen and Horizon stressed that they would try to fight the FTC in court in order to complete the deal.
The FTC argued that Amgen could use rebates it pays on its “blockbuster” drugs to pressure insurers to pay for two of Horizon’s drugs, one for an autoimmune condition that affects the eyes and the other for a rare form of gout.
The FTC said that if Amgen were to own these two drugs and use their influence in the market to persuade the buyer to cover the cost, this could discourage other companies from launching competing drugs that would eventually lower the price. The cost of the first drug is about $350,000 for a six-month treatment period, while an annual supply of the second drug costs $650,000.
It is noteworthy that “Pfizer” announced record profits during the past year, while it expects a slowdown in revenues during the current year.
The company that developed one of the world’s major coronavirus vaccines stated that its revenues during the past year amounted to $ 100.3 billion, which is the highest revenue in its history.
At the same time, the company expects its revenues to decline during the year 2023, to range between 67 and 71 billion dollars, with the receding of the Corona pandemic and the decline in demand for vaccines and related medicines.
Pfizer’s annual revenue reached $ 81.3 billion in 2021, and profits amounted to $ 22 billion, mainly driven by sales of coronavirus vaccines.
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