What's going on?

Pfizer announced plans on Monday to buy Arena Pharmaceuticals in a near-$7 billion deal, so let�s just hope the US drugmaker doesn�t regret meeting its hero�

What does this mean?

Business has been booming for Pfizer during the pandemic, thanks in no small part to a little-known vaccine it produced alongside BioNTech. In fact, the company�s expecting its annual revenue to be nearly twice as high this year as it was in 2020 � a new record.

But Pfizer�s not about to rest on its laurels, and it�s been looking to use all that extra cash to expand into other treatments. It started by buying Trillium Therapeutics for $2.2 billion last month to boost its arsenal of blood cancer therapies, before going one step further this week: the company announced it�d be buying drug developer Arena Pharmaceuticals for $6.7 billion. Pfizer’s hoping it�ll help speed up the development of Arena�s most promising drug � a tasty little bowel disease number.

Why should I care?

For markets: Pfizer goes above and beyond.
Arena�s share price jumped 92% following the announcement, which is pretty standard: Pfizer is paying a premium on what Arena�s currently worth to try and convince shareholders to accept the offer. And not just a small premium, either: the deal values Arena�s shares at $100 each � about double what they were trading at before the announcement.

Zooming out: Pfizer�s making serious margins.
Pfizer might be smart to branch out sooner rather than later. See, the company is reportedly selling its vaccine � which costs just 76p ($1) a dose to produce � for �22 ($29) a dose in the UK. But now that it�s coming under so much fire for arguably profiteering off a life-and-death situation, it might have no choice but to cut its prices � not great news for its bottom line going forward.