The recently disclosed failed bid by Pfizer to acquire bigpharma rival AstraZeneca has analysts predicting several outcomes as M&A fever sweeps the pharma sector.
The talks between Pfizer and AstraZeneca are said to have stalled several months ago with no plans to resume discussions. However, the financial markets have caught the whiff of M&A and speculation is mounting that a new round of consolidation is imminent.
Stalled growth in coming years from existing and pipeline products is leading to the industry’s largest companies seeking alternative sources of growth.
We may see Pfizer make another bid for AstraZeneca, with an improved offer exceeding the rumoured $101 billion initial bid. A higher asking price may be too good to resist for battling AstraZeneca which reported a loss of 6% in 2013 due to loss of exclusivity on some of its brands.
Joan Campion, a spokeswoman for Pfizer, and Michele Meixell, a spokeswoman for AstraZeneca, said the companies don’t comment on market speculation, when asked about the deal talks.
Alternative scenarios include:
- Pfizer making a bid for a rival such as Shire or Bristol-Myers Squibb
- AstraZeneca to make a defensive bid for Amgen or Abbvie
Pfizer may be motivated to do a deal with an overseas rival due to it having about $70 billion in cash overseas subject to repatriation taxes, according to Boris of SunTrust Banks. Companies have been using mergers to re-domicile in more attractive tax jurisdictions such as Ireland.
Other deals in the news in recent days amongst big pharma companies include:
- Valeant’s offer to acquire Allergan in a cash and stock deal valued at $46 billion
- Novartis and GlaxoSmithKline entering a joint venture for consumer health
- Novartis and GlaxoSmithKline to exchange assets in the fields of oncology and vaccines
- Novartis and Eli Lilly entering an asset purchase agreement for animal health
These and other recent deals continue the theme of consolidation and specialization taking place amongst the top pharma companies as they seek to focus resources to maximize return on R&D investment.
Report: Merger and Acquisition Terms and Agreements
Report: Partnering Deals and Alliances with Pfizer
Report: Partnering Deals and Alliances with AstraZeneca