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Pfizer Expands Cancer Platform With High-Priced Medivation Acquisition

Despite the high price paid, we don't expect any major changes in Pfizer's fair value estimate.

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Despite the high price point for Medivation, we believe Pfizer can leverage Medivation's cancer drugs more effectively through Pfizer's strong distribution channels. Further, Pfizer's large size dilutes the minor overpayment. From a strategic standpoint, the deal strengthens Pfizer's growing oncology franchise, and we remain confident in the company's wide moat.

As pricing power has eroded in several therapeutic areas, cancer drugs have continued to support robust prices, which we believe further propelled Pfizer's decision to acquire Medivation. The importance of strong pricing power likely led several other bidders, including

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Damien Conover

Director of Equity Strategy
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Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

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