Pfizer will enter the cannabis marketplace with its announced purchase of clinical-stage firm Arena Pharmaceuticals, Inc. They signed a definitive agreement to acquire all the outstanding shares of Arena for $100 for each stake in cash – nearly $6.7 billion. Both companies’ boards of directors approved Pfizer using money on hand to fund the acquisition.
San Diego-based Arena is a bioscience firm with a dedicated cannabinoid research and development department focused on developing treatments for various immuno-inflammatory ailments. Their drug pipeline includes several treatments in gastroenterology, dermatology, and cardiology. Etrasimod is currently in development to treat gastrointestinal and dermatological immuno-inflammatory diseases. Pfizer plans to utilize its research and development capabilities to accelerate the growth of Etrasimod.
Pfizer’s $6 billion purchase includes Arena’s drugs that treat immune-inflammatory diseases, and their investigational drug Olorinab formulated to treat symptoms associated with gastrointestinal disorders. Pfizer says the acquisition will expand its cancer and inflammatory disease drug pipeline.
“The proposed acquisition of Arena complements our capabilities and expertise in Inflammation and Immunology, a Pfizer innovation engine developing potential therapies for patients with debilitating immune-inflammatory diseases with a need for more effective treatment options,” said Mike Gladstone, Global President & General Manager, Pfizer Inflammation and Immunology.
Pfizer, already a pharmaceutical giant, has been expanding recently. Last month, Pfizer concluded the acquisition of all outstanding shares of Canadian immuno-oncology company Trillium Therapeutics for just over $2 billion in cash.
There have been other recent cannabis-related takeovers. In 2021, Jazz Pharmaceuticals acquired GW Pharmaceuticals and their Food and Drug Administration-approved cannabinoid therapy Epidiolex, which treats children with severe seizures. In 2018, Tilray made a medical cannabis distribution arrangement with drug giant Novartis AG. Johnson and Johnson, in 2017, brought Avicanna onboard into their life sciences innovation center in Toronto, Canada.
The market cap of the top 10 pharmaceutical companies is $1.7 trillion. The largest, Johnson & Johnson, has a market capitalization of $374 billion. The ongoing legalization of cannabis and wide acceptance of seeing people light up some blunt wraps is starting to challenge the bottom line for major pharmaceutical companies. Medical cannabis sales reached $20 billion in 2020, are on schedule to surpass $26 billion in 2021, and are projected to rise to $45.9 billion in 2025. The upside is that having large, long-established companies involved in the market could accelerate public acceptance of cannabis as a viable treatment alternative for many ailments. Legitimizing medical and recreational marijuana destigmatizes cannabis and could grow numerous companies.
Acquisitions like Pfizer’s seem a clear signal that “Big Pharma” is no longer deterred by regulatory concerns and will no longer watch the cannabis industry from the sidelines. This push for takeovers is steadily intensifying as more partnerships, patents, and sponsored clinical trials are approved.
Many legislators and cannabis activists are concerned that big fish gobbling up medium fish makes establishing equity and social justice more daunting. Corporations have a long history of putting the bottom line ahead of other concerns. Additionally, current prescription costs put profit margins before patient access. Overall, significant acquisitions by large companies frequently leave little room for smaller, minority-led companies to gain a foothold. But because cannabis is a new industry, it’s perched at the threshold of being able to establish social and financial change.