The pharmaceutical industry was the focus of intense debate earlier this year owing to potential merger between Pfizer Inc. (NYSE:PFE) and AstraZeneca plc (ADR) (NYSE:AZN). With the six month cooling period coming to its close, the question that looms in the minds of many is whether another bid is on its way to AstraZeneca’s door?
CNBC‘s Catherine Boyle discussed this possibility. She pointed out that a lot has changed in the past six months, since Pfizer Inc. (NYSE:PFE)’s first offer, but when it’s about the largest pharmaceutical company in the world, nothing is set in stone.
“[…] It [AstraZeneca plc (ADR) (NYSE:AZN)] is less attractive than it was 6 months ago. That tax inversion reason has been taken out of the multiplier. They have also made a deal with Merck, which means that they are going to have access to some of the Immuno-Oncology drugs, the new kind of cancer treatment, which had been one of the real factors behind a potential AstraZeneca deal, and on the other hand one of the other potential companies that Pfizer Inc. (NYSE:PFE) might bid for would have been Actavis, which is now off the table […],” said Boyle.
The core issue is that Pfizer Inc. (NYSE:PFE) needs acquisition or even acquisitions to plug a hole in its drugs pipeline. As is usually the case in the pharmaceutical industry, smaller promising concerns get bought by the larger companies. The deal is a mutually beneficial one, since they benefit from the large pockets and better distribution channels of the bigger company while a giant like Pfizer Inc. (NYSE:PFE) gets to add some much needed new drugs in its portfolio.
The pertinent question is that is the deal with Merck & Co., Inc. (NYSE:MRK) goint to satiate Pfizer’s hunger? With AstraZeneca plc (ADR) (NYSE:AZN) in its pocket, the pharmaceutical giant could diversify its risks and land a greater chance of dominating the Immuno-Oncology scene, which is expected to grow upto $35 billion annually over the next decade, according to Citigroup.
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