Pfizer Agrees to Buy Seagen for $43 Billion

However, it is likely to face scrutiny from antitrust regulators, who have stepped up their reviews of healthcare and other deals.

The agreement is an early sign that, despite the threat of close antitrust examinations and higher interest rates, big pharmaceutical companies are poised for heavy deal-making this year.

The drugmakers had in recent years backed off from what had been a torrid deal pace, after potential targets came to cost too much. Yet, they now need to inject new drugs—and their sales—into aging lineups, and price tags have dropped after some research failures and interest rates rose.

Also on Monday, French drugmaker

Sanofi SA

SNY -0.36%

said it would buy

Provention Bio Inc.,

PRVB 260.67%

which sells diabetes treatment Tzield, in a deal valued at $2.9 billion.

Seagen, which is based outside Seattle, helped pioneer a class of drugs known as antibody drug conjugates, or ADCs, that can home in on tumors to strike them with a toxic agent.

The drugs could become one of the next big segments of the $375 billion worldwide cancer-drugs market, accounting for $31 billion in sales in 2028, drug-market-research firm Evaluate estimates.

New York-based Pfizer has been looking for acquisitions to help it offset an expected sales loss of $17 billion by 2030 as some top-selling drugs like blood thinner Eliquis and breast-cancer drug Ibrance lose patent protection in the next several years.

Sales of Pfizer’s Covid-19 vaccine and drug have buoyed the company’s performance in recent years. Executives have said they can’t count on the same level of sales going forward because the pandemic is entering an endemic phase, prompting the company to use its tens of billions of dollars in Covid-19 revenue for deal-making.

Cancer treatment is a key franchise for Pfizer, contributing more than $12 billion of the company’s $100 billion in sales last year.

Pfizer has been looking to increase its cancer-drug footprint. Analysts said Seagen’s therapies would expand Pfizer’s portfolio of breast and bladder cancer drugs, while complementing its efforts to build positions in other tumors with large patient populations like myeloma.

“We are investing to battle cancer,” Chief Executive Albert Bourla said in an interview. “We are investing to grow.”

Pfizer executives said they expect federal antitrust authorities will sign off on the deal because the company and Seagen bring complementary capabilities.

Shares in Pfizer rose 2.7% on the New York Stock Exchange on Monday morning, while Seagen stock jumped more than 16%.

The Seagen acquisition will help Pfizer reach its goal of generating $25 billion in additional revenue by 2030 through business development such as deal-making, Pfizer executives said.

Seagen, which expects $2.2 billion in revenue this year, could bring Pfizer more than $10 billion in revenue by 2030 if the biotech succeeds in broadening application of its drugs to more kinds of tumors, Pfizer executives said.

Pfizer’s revenue target surpasses the estimates of many analysts, but Mr. Bourla called the target reasonable. He said Pfizer can help Seagen expand its commercial capabilities and use its global drug-development network to help Seagen accelerate its pipeline.

He also said Pfizer expects $1 billion in savings from the deal over the next three years, largely from avoiding costs like having to broaden its own sales force. Instead, Pfizer can use Seagen’s.

“The proposed combination with Pfizer is the right next step for Seagen to further its strategy,” said Seagen CEO

David Epstein.

Seagen caught the attention of Pfizer and other drugmakers because of the potential for ADCs.

Merck

& Co. had discussed buying Seagen last year, but the companies couldn’t agree on a price, The Wall Street Journal has reported. Pfizer’s talks with Seagen advanced quickly after the Journal reported last month that the companies had started talking.

Pfizer was eager to add cancer drugs to its portfolio, Mr. Bourla said. Seagen was especially attractive because it already has four approved products—which don’t carry the risk of failing during testing—along with a promising pipeline. “It’s the perfect fit, perfect target. We looked at everything,” Mr. Bourla said.

ADCs have started to win approval for some common cancers such as breast cancer, and drugmakers have explored deploying them in combination with other cancer agents, including immunotherapies that are some of the world’s top-selling drugs.

Seagen has more than nine studies under way testing ADCs with immunotherapies.

To make sure Seagen scientists keep innovating, Mr. Bourla said Pfizer expects to maintain Seagen’s laboratories in Seattle and San Francisco.

“We are not buying the golden eggs. We are acquiring the goose that lays the golden eggs,” Mr. Bourla said on a conference call with analysts and investors.

Seagen sells four products, three of which include ADCs. They include Padcev, which was approved in 2019 for treating bladder cancer patients who had failed to improve after taking other drugs.

The U.S. Food and Drug Administration is reviewing a regimen combining Padcev with Merck’s Keytruda immunotherapy for treatment of advanced bladder cancer in patients who are ineligible for chemotherapy. Padcev could total $2.8 billion in sales in 2028, according to analysts surveyed by FactSet.

Seagen, which was previously known as Seattle Genetics, had emerged as a deal target after the CEO and chairman resigned last year as the company was investigating an allegation of domestic violence. The company said the executive denied the allegations and told the company he was going through a divorce.

Mr. Epstein took the helm of Seagen in November, after its talks with Merck had ended, and was plotting an independent course for the company.

Write to Jared S. Hopkins at jared.hopkins@wsj.com and Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com