On Monday, Pfizer (PFE) spent $14 billion to acquire prostate cancer drug maker Medivation (MDVN). The main drug that Medivation has, is a prostate cancer drug known as Xtandi. Why would Pfizer pay $14 billion to acquire Medivation? The reason is that Xtandi has already generated at least $2.2 billion in sales. When the acquisition is complete, Pfizer expects to be able to boost its earnings per share immediately. 

The final deal of $14 billion translates to $81.50 per share in an all cash type transaction. The deal still needs authorization from shareholders, but considering that the deal was at a 21% premium to the last closing price it should more than likely go through. In addition, the $14 billion deal offer made by Pfizer is far bigger than the one made by Sanofi (SNY) of $11 billion. 

Pfizer has been doing a tremendous job of spending its cash on hand. After the break-up deal between it and Allergan (AGN), Pfizer has been making much smaller acquisitions. It has been acquiring smaller biotech companies in hopes of boosting its pipeline. Just last May, Pfizer paid $5.2 billion to acquire Anacor  for its eczema drug. Many big pharma companies have been on the hunt lately looking for the next best thing to acquire. Other companies which are thought of as good buyout candidates are Incyte (INCY), Vertex Pharmaceuticals (VRTX), and Biomarin (BMRN).