Pfizer wants to acquire AstraZeneca

Pfizer announced its interest publicly in acquiring AstraZeneca and reincorporating in Britain, the New York Times reported.

Pfizer said it offered to buy AstraZeneca for approximately $100 billion. If the deal materializes, it would represent the biggest-ever foreign takeover of a British business and allow Pfizer to pay a lower corporate tax rate of 20%, according to some reports.

The proposed acquisition has highlighted consolidation-based R&D and operating efficiencies, off-shore funding-related tax advantages, and a bulking-up of Pfizer’s three operating divisions for possible spinoff at a later date, according to Elan Rubinstein, PharmD, MPH, of Access Market Intelligence, which provides market intelligence to the pharmaceutical and healthcare industries.

“So potentially [the deal offers] very good long-term value from a shareholder perspective,” Dr. Rubinstein said.  “From the perspectives of managed care, pharmacy benefits, specialty drugs, and prescribers, I don't view the merger as impacting drug product preference or contracting dynamics.”    

 “A number of companies in the pharmaceutical market have found the ‘patent cliff’ an obstacle difficult to overcome,” said John Santilli of Access Market Intelligence, which provides market intelligence to the pharmaceutical and healthcare industries.

“Pfizer has struggled to grow revenue since Lipitor lost patent protection,” Santilli said. “The company finds its product pipeline lacking and its arthritis drug Celebrex losing patent protection this year. AstraZeneca is also finding it difficult to grow revenues as the company hopes the products in its pipeline bear fruit over the next few years. AstraZeneca’s heartburn treatment Nexium loses patent protection this year while cholesterol drug Crestor has patent protection only through 2016.”

According to Santilli, Pfizer, while looking at combining both companies into a single worldwide operation for positive tax implications, views AstraZeneca’s pipeline as one of the growth vehicle it needs to reverse its fortunes.

“AstraZeneca forecasts up to 19 possible candidates in phase 3 trials in 2014 to 2015,” he said. “AstraZeneca has three R&D areas that are complementary to Pfizer: Oncology, cardiovascular disease, and inflammation.” 

Pfizer's bid for AstraZeneca differs from the recent trend in pharmaceutical mergers, which have looked at partnerships and collaborations to strengthen their businesses, according to Santilli.