One such drug, AstraZeneca's Lynparza, is already on the market and several more are in development. Tesaro recently announced positive data in ovarian cancer for its PARP inhibitor, raising the perceived value of other drugs of its type. Medivation and Pfizer say theirs could be the most potent and might be used in combination with Pfizer's Ibrance, but that remains to be seen.

If Pfizer is interested in the PARP inhibitor now, it was not so much a few years ago. In 2011, it divested its own PARP inhibitor to Clovis Oncology for a convertible promissory note worth a mere $7 million. Pfizer will also be eligible for payments of up to $259 million and a midteen percentage royalty if the Clovis drug, called rucaparib, reaches the market.

The other Medivation drug in development, pidilizumab, could help the body's immune system fight cancer, though its mechanism of action is not known. This approach, called immunotherapy, is the hottest area in oncology, or perhaps all of medicine, and Pfizer is trying to catch up to leaders like Bristol-Myers Squibb and Merck.

Still, Mr. Read said in a conference call with analysts on Monday that Pfizer's valuation of Medivation was based largely on the prospects for Xtandi, which it hopes can be used earlier in the course of prostate cancer than it is now.

"We believe that Pfizer is the ideal partner to extend the reach of our blockbuster Xtandi franchise and take our promising, late-stage assets — talazoparib and pidilizumab — to their next stages of development so that they can be made available to patients as quickly as possible," David Hung, founder and chief executive of Medivation, which is based in San Francisco, said in the news release.

Xtandi competes mainly with Johnson & Johnson's Zytiga. There is some prospect that there could be generic versions of Zytiga coming in the next few years, which could affect sales of Xtandi, though Pfizer executives said in a conference call to discuss the deal that they think Xtandi will be able to compete even with Zytiga generics.

Johnson & Johnson is also developing another prostate cancer drug, apalutamide, invented by the same researchers at the University of California, Los Angeles, who invented Xtandi. Medivation had sued, saying it had the right to that drug as well, but it lost.