Pfizer seeks partnerships to broaden and diversify its portfolio

Image by Mike Ramírez Mx from Pixabay

Pharmaceutical giant Pfizer has teamed up with a biology biotech company Ginkgo Bioworks to research and develop RNA medicines, following a series of acquisitions and partnerships to grow and diversify its portfolio 

With the deal of up to $331 million the two companies plan to work on up to three projects in the coming years. Ginkgo will receive the upfront payment for its expertise in developing treatments utilizing RNA technology, which has gained a lot of attention in the medical field recently because of its promising results.

“Access to Ginkgo’s proprietary platform will help enable Pfizer to search for novel and exciting RNA constructs with improved stability and expression that could lead to more effective treatments,”  Will Somers, PH.D., Pfizer’s Head of Biomedicine Design, said in the press release. 

Partnering up with Ginkgo is the latest move by Pfizer on its way to grow its portfolio as demand for Covid-19 vaccines, which buoyed the company’s revenues since the pandemic, dwindles. It’s not yet known what products are in the works but partnership with Ginkgo is another step forward to developing RNA treatments for Pfizer, which had taken the world by storm with its mRNA Covid-19 vaccine, developed in partnership with BioNTech.

In an effort to broaden its portfolio and pipeline, in the past couple years Pfizer has been partnering up with different pharma companies, like ReViral Therapeutics, Biohaven and Global Blood Therapeutics. This spring it announced a major $43 billion merger with Seagen, a prominent pharmaceutical company focusing on cancer treatment. The two companies are working with the SEC to finalize the partnership. 

“We are not buying the golden eggs, we are acquiring the goose that is laying the golden eggs,” Pfizer CEO Albert Bourla said on a conference call discussing the merger. 

Pfizer estimates that Seagen’s marketed oncology drugs will bring in around $8 billion a year, placing Pfizer on a path to meeting its targets of acquisition-based revenues  by 2030.

The 2030 revenue targets are noteworthy as Pfizer has a publicly articulated goal of deriving $25 billion of risk-adjusted 2030 revenue from acquisitions. With a successful partnership with Seagen, Pfizer would be set to meet over 80% of the goal, Michael Levesque, senior Vice President and an analyst at Moody’s Investors Service, said in his recent credits report.

However, he says partnerships like that of Pfizer and Ginkgo’s are very routine throughout the industry. 

“The upfront payment is very modest relative to Pfizer’s overall size and cash flow. Any products that would pan out from the collaboration would likely be years away,” he said in an email to Times Square Investment Journal.

Ginkgo’s shares jumped by more than 14% on Wednesday. HoweverPfizer’s shares continued its downward trend, even hitting the 52-week-low of $32.02 on Wednesday. 

There is still uncertainty whether Pfizer can achieve its long-term growth targets, according to Levesque, because the company faces the same challenge as other pharmaceutical companies.

“Some of this revenue would be from experimental products still in clinical trials. There is a risk that the clinical trials will not succeed,” he said. And the revenue targets, that reflect the company’s expectations for things like market share, pricing, growth in the number of patients, might also not pan out.