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Pfizer Inc surpass several other bidders, stated it agreed to purchase U.S. cancer drug company Medivation Inc for $14 billion in cash, adding its bestseller prostate cancer drug Xtandi to the company's increasing oncology list.

Shares of Medivation  increased in morning trade, to a level that was 19% beyond the prior record close of $67.78 on March 20, 2015. Volume touched 34 million shares in the first two hours of trade, approximately 20 times the full-day average, and sufficient to make the stock the most aggressively traded on U.S. exchanges.

Medivation investors should be excited about the deal to be acquired by Pfizer, which was announced last  Monday, because it will be more than just a fair price for the biotechnology company.

Pfizer’s stock dropped 0.3%, however, cut back losses of as much as 1% in premarket trade soon after the transaction was declared. In comparison, the Dow Jones Industrial Average dropped 52 points.

The agreement has given a big boost to the biotechnology sector, with the SPDR S&P 500 Biotech exchange traded fund moving up 1.8%, with about three quarters of its equity components making progress. Medivation is the ETF’s 11th most heavily influenced component.

August 2, 2016, the pharmaceutical company posted a better-than-expected quarterly result with an average earnings per share (EPS) estimate of $0.62, while revenues for the quarter rallied by about 11 percent to $13.15 billion, topping the average analyst forecast of $13.01 billion. 

However, stock prices continued to a downward trend after earnings report release.

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While currency movement reduced Pfizer’s 2nd quarter revenues by 3% ($302 million), operational progress was 13% ($1.6 billion). International revenues dropped 1% to $6.8 billion. In the meantime, U.S. revenues developed 27% to $6.3 billion.

After the anticipated breakup in April that witness the pending mega merger between Pfizer and Allergan collapse by the wayside, Pfizer has found its new goal and that is acquiring Anacor Pharmaceuticals.

And on May 16, 2016, Pfizer Inc. and Anacor Pharmaceuticals,Inc.broadcasted that they have moved into a total merger deal. This is to gain access to Anacor’s new gel for treating eczema. Anacor shares increase approximately 54% to $98.50 in premarket on that day, just below the proposed price of $99.25 per share in cash.

September 3, 2015, Pfizer Inc. declared that it has completed its acquisition of Hospira, Inc.

Shares of Pfizer increased 1% to $32.29 in morning trading of September 3, after the pharmaceutical company completed its acquirement of Hospira.

Pfizer anticipated the purchase of the injectable drug and the infusion technology company to be immediately increase its earnings. The purchase is expected to add 10 cents to 12 cents a share to Pfizer's earnings in the first whole year after the close.

The firm stated it expect to gather $800 million in yearly cost synergies linking to the procurement by the year 2018.

Conclusion:

The deal with Medivation will strengthen Pfizer's existence in the fast developing and lucrative oncology drug market. Pfizer expects the agreement to add 5 cents a share to earnings in the first full year after closing, which is anticipated to happen in the 3rd or 4th quarter of 2016. .

However, If the acquisition is not accomplished, Medivation could pay Pfizer a $510 million termination fee, according to a regulatory filing.

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It is predicted Pfizer earnings would increase immediately after it acquire Medivation. The deal comes four months after Pfizer and Ireland built Allergan discarded their $160 billion merger. Pfizer has since purchased Anacor Pharmaceuticals Inc in a $5.2 billion contract  to add an eczema gel to its portfolio.

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