Will Pfizer Inc. (NYSE:PFE) Find Safe M&A Bets?

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Ian Read, Pfizer Inc. (NYSE:PFE) CEO, said during a conference call with analysts that the drug maker is looking for deals that offer potential for creating value in near future. Read added that the company doesn’t need to do a large deal to keep its operations running. Pfizer is sitting with billions of dollar in cash and is now considering near-market assets rather than high-risk pipeline deals.

Read also talked about Pfizer- Merck deal last year concerning the immuno-oncology asset. He mentioned that the deal helped the company strengthened its research. In absence of the Merck deal, the company might have been considering more deals to acquire assets in its research. Read expressed that the company’s middle-stage to late-stage research pipeline is strong and hence they will use capital to accelerate EPS growth.

Pfizer Inc. (NYSE:PFE) last year failed in its efforts to acquire pharmaceutical giant AstraZeneca plc (ADR) (NYSE:AZN) for about $118 billion. Following which it bolstered its pipeline with a $2.9 billion deal with Merck KGaA, signed late last year. As per the agreement, Pfizer is paying $850 million up front and $2 billion more for up to 20 new cancer immunotherapies.

Albert Bourla, President for Pfizer Oncology, said that the Merck KGaA deal positions the company well to compete in the first wave of “immuno-oncology” discoveries and be a leader in the “combination” therapies.

Pfizer Inc. (NYSE:PFE) has roughly $33 billion in free cash and everybody is eager to know what the pharmaceutical giant will do with free resources. While analysts were speculating the company’s interest in acquiring Actavis plc (NYSE:ACT) and Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), Read called them just rumors.

Besides near-market assets, Pfizer won’t be hesitant in acquiring intellectual property that could add significant value to the company’s portfolio, said Read.

Thrivent Financial analyst David Heupel recently told Bloomberg that Pfizer is looking for strategic assets and they will take a disciplined and diligent financial approach.

Lisa Ray

Lisa Ray primarily covers Retail and Healthcare. Lisa Ray has completed her MBA (Finance) and an avid market tracker. She is a stock market analyst who closely tracks US markets along with other global markets like India. She has been expressing her views for years about markets and also advises various clients.

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