Pfizer is buying Anacor Pharmaceuticals for $5.2 Billion. Analyst forecast that they will soon lead the market for eczema.
The acquisition of Anacor means Pfizer will have full rights over Crisaborole, a non-steroidal topical gel used for treating eczema and other skin diseases. There is a huge potential for this market because around 318 to 325 million Americans are suffering from this condition. Pfizer is hopeful that once this drug got approval from the Food and Drug Administration, the company will generate massive sales.
So, is there really a Market Potential?
Yahoo News reported that for the past 15 years, there is no drug that is currently approved for the treatment of eczema. This could mean that this condition may not have been properly researched on by biotech companies. Probably, since there is a potential for the market, the FDA has made a very strict regulatory measures making it hard for the pharmaceutical company to penetrate the area.
If the drug is approved, this will be a great market opportunity and multi-billion dollar business for Pfizer. The global sales market for eczema is $4 billion and it is expected to increase to $9 billion in the coming years. The present medication for eczema is topical steroids known to have the following side-effects like increase incidence of getting cataracts, glaucoma and skin atrophy.
So, Crisaborole may be the preferred medical treatment for eczema as it does not cause such conditions.
Who’s the Possible Competition to the Business?
Analysts are looking into the possibility of having a competition with Regeneron Pharmaceuticals (REGN). The company is the developer of Dupilumab, an injectable for the treatment of severe cases of eczema. This drug is not yet available in the market since it is still up for approval.
But looking at it, there’s seemed to be no competition at all. In fact, the two drugs may complement each other. If approved, Crisaborole will be used for mild cases of eczema while Dupilumab is for the severe types.
There are other biotech companies who are developing drugs for eczema therapy. AztraZeneca Plc (AZN) is working on tralokinumab while Roche Holding AG is testing on lebrikizmab. But the testing phase may take years, so technically Pfizer still has the advantage in the market.
Is Anacor Overvalued?
Pfizer will pay billions to buy Anacor; some says they deal may be overvalued.
New York Times reported that Pfizer is looking on for a long term-sales of Crisaborole. They are expecting sales of $2 billion annually. If this happens, Anacor will be worth $9 billion. So Pfizer still has the lead since it is buying Anacor for $5.2 billion.
More so, Pfizer will benefit from Anacor’s Kerydin, which is used for the treating toenail fungus.
The End Result
Obviously, Pfizer is strengthening its product portfolio by acquiring companies that has a stable product line. Crisaborole has a huge selling potential and Pfizer is taking a chance to generate enormous sales once this drug is approved by FDA. Pfizer may have offered a lofty amount to buy Anacor; it just shows how serious the company is in its pursuit for growth.
Buying profitable business will strengthen the company and definitely will result to bigger shares and massive revenues.