Pfizer Urges to Salvage Obesity Drug Deal Amid Novo's Offer

The High-Stakes Battle for Metsera

Pfizer Inc. finds itself in a high-stakes race against time as it tries to outmaneuver Danish drugmaker Novo Nordisk A/S in its bid for obesity treatment company Metsera Inc. This sudden shift has sent shockwaves through the pharmaceutical industry, with Metsera’s shares surging over 25% following Novo’s rival offer. Pfizer, which had previously agreed to acquire Metsera for about $5 billion, now has just four business days to either match or exceed Novo’s bid or walk away entirely.

Analysts suggest that this situation is akin to a chess game, where every move must be carefully calculated. Evan Seigerman, an analyst at BMO Capital Markets, emphasized that the margin for error is shrinking rapidly. “They need to be very strategic in the next move,” he said.

Novo’s offer, which starts at $6.5 billion and could rise to $9 billion if certain targets are met, is significantly higher than what Pfizer was offering. If all targets are achieved, Novo’s maximum price would be 11% higher than Pfizer’s original bid. This has put pressure on Pfizer to act swiftly, as Metsera’s board of directors has indicated that it may walk away from the Pfizer deal if Novo’s offer appears superior.

Despite the challenge, some analysts believe that Pfizer might not back down easily. Jared Holz, a health-care specialist at Mizuho, suggested that “they’ve already put $5 billion on the line, what’s another billion?” He added that if the situation escalates into a bidding war, it’s possible that Pfizer could walk away.

Competition in the Obesity Market

The competition between Novo and Eli Lilly & Co. for dominance in the weight-loss drug market is intensifying. Both companies are vying for a foothold in a sector that is growing rapidly. While other companies like Roche Holding AG and Amgen Inc. are also developing their own versions of these drugs, they are not expected to reach patients soon. Experts argue that increased competition will be crucial in making prices more affordable for Americans.

Lilly has been gaining ground quickly, but Pfizer is still trying to enter the market. CEO Albert Bourla, who gained fame during the pandemic for his work on the Covid vaccine and pill, is under pressure to find new drugs. His previous efforts in developing an obesity treatment have not been successful, leaving Metsera as a potential option to help Pfizer gain a foothold in one of the fastest-growing areas of medicine.

A Reckless Bid?

Pfizer has publicly criticized Novo’s bid for Metsera, calling it “reckless” and suggesting that it is a flagrant breach of a dominant market position. The company has dismissed the idea that Novo’s offer is superior as “illusory” and has hinted at pursuing legal options to enforce its deal with Metsera. However, internally, Pfizer is considering whether it has the scope to counterbid, according to a person familiar with the matter.

Pfizer has also appealed to regulators, claiming that Novo’s bid violates American law and poses substantial risks. However, Novo and its advisers believe that antitrust regulators will ultimately clear the deal, given that Metsera does not yet have an approved weight loss drug in the market. Novo has started submitting relevant paperwork with the Federal Trade Commission, and the company does not expect significant scrutiny from regulators in other countries.

The Trump Factor

Pfizer’s relationship with the Trump administration has played a role in its current strategy. As the first pharma company to strike a deal with President Donald Trump, Pfizer has benefited from favorable treatment, including a three-year reprieve from tariffs. Bourla, who curried favor in Trump’s first administration, has proven adept at navigating the second administration as well.

In early October, Bourla stood side by side with Trump in the Oval Office to announce a landmark drug-pricing deal. This partnership has given Pfizer a strategic advantage in navigating the complex regulatory landscape.

Strategic Options

According to The News Pulse intelligence analyst Michael Shah, Pfizer has several options moving forward. It could wait for Novo to face regulatory hurdles, which are uncertain given the overlap between Novo and Metsera’s drugs in the market. Alternatively, Pfizer could increase its bid or look to acquire another obesity biotech, such as Viking Therapeutics Inc.

Ultimately, Shah believes that if Pfizer wants to enter the obesity market, it needs to make a deal. Even capturing a small percentage of the market could translate into huge potential sales.

The Danish Dealmaker

Novo has demonstrated its ability to make bold moves, but it has faced challenges in managing the politics and market dynamics in the US, the most important pharma market in the world. The company is undergoing a transformation to regain its lead in the weight-loss market it once pioneered.

Earlier this month, more than half of the board, including Chairman Helge Lund, stepped down after a boardroom dispute over the pace of change at the drugmaker. Lars Rebien Sorensen, a previous leader of the Danish drugmaker, is taking over as chair as the company attempts to recast itself after its rapid growth slowed.

Maziar Mike Doustdar, the new CEO, aims to instill a “performance culture” to regain lost ground in the US and advance the company’s drug pipeline. Since taking over in August, Doustdar has announced plans to cut 9,000 jobs globally and save 8 billion kroner ($1.2 billion) by the end of 2026. He also struck a deal to buy Akero Therapeutics Inc. to expand its portfolio in a type of liver disease linked to obesity, before surprising the market with an aggressive bid to derail Pfizer’s deal with Metsera.

Regulatory Challenges

Novo’s bid uses an unusual structure that allows Metsera investors to receive most of the money upfront when the deal is signed. Shareholders in a company being acquired normally only receive compensation after formalities like regulatory approvals are completed, which can add uncertainty if those procedures drag on longer than usual.

The Novo bid has the potential for a longer regulatory process than Pfizer’s, given its large existing position in the obesity market. Regulators could view Novo’s attempt to outbid as a strategy by a dominant player to eliminate potential competition, which likely makes a Novo deal a harder antitrust review than Pfizer’s.

“There has to be some risk that Pfizer will now simply be lobbying the Trump admin to have Trump tweet against Novo’s competing bid and shoot this dead,” said David O’Hara, a managing director at merger arbitrage specialist MKI Global Partners. “Pro-America and pro-consumer/competition is the clear message here.”