Why Pfizer Inc. (PFE) May Not Bid For AstraZeneca plc (ADR) (AZN) Again?


Why Pfizer Inc. (NYSE:PFE) May Not Bid For AstraZeneca plc (ADR) (NYSE:AZN) Again?

If investors thought Pfizer Inc. (NYSE:PFE) would still pursue AstraZeneca plc (ADR) (NYSE:AZN) deal then their hopes are up in the air. Pfizer’s recent gesture of signing a cancer drug deal with Merck & Co. Inc. (NYSE:MRK) has almost eliminated its need to go for AstraZeneca. The move from the Drugmaker comes a few days earlier from Nov. 26, when it might have been given another chance to revise its offer to Astra as per British rules. It is to be noted that AstraZeneca Plc had turned down Pfizer’s $118 billion offer in May.

Pfizer’s Deal with Merck

Pfizer’s main objective behind AstraZeneca plc (ADR) (NYSE:AZN) was to gain access to its cancer drugs pipeline. However, failure pushed Pfizer to look for alternatives. Therefore, Pfizer Inc. (NYSE:PFE)’s deal with Merck appears to be a step towards new collaboration. Under the deal, Merck will receive an upfront payment of $850 million while it will share rights with Pfizer for developing a cancer drug. Merck will also be set to receive $2 billion depending on the success of the drug in the future. Among major drugs in Merck’s portfolio include MSB0010718C, an anti-PD-L1 therapy that helps prevent tumors to bypass the defenses of the immune system. It is to be noted that AstraZeneca plc (ADR) (NYSE:AZN) has one rival drug under development.

Unlikely To Renew

Pfizer Inc. (NYSE:PFE) and Merck deal has nearly confirmed the doubts that the former will revisit the AstraZeneca deal. As shareholders look for clearer signs, AstraZeneca’s shares already slid by 1.55% to $74.21 on Thursday. Meanwhile, Pfizer’s representative has indirectly signaled the obvious by stating that British rules do not permit it to make a remark on its plans for AstraZeneca. Meanwhile, Pfizer said that the cost of Merck’s deal will have its reflection on 2014 results. The company anticipates 2014 earnings per share in between $1.40 to $1.49 from $1.50-$1.59, as stated earlier.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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