From The Editor | April 28, 2014

AstraZeneca To Pfizer: Thanks But No Thanks

By Ed Miseta, Chief Editor, Clinical Leader

Miseta

A possible merger between two Big Pharma heavyweights, Pfizer and AstraZeneca appears to be dead, at least for the time being. On April 26th the Board of AstraZeneca declined a request from Pfizer to issue a joint statement announcing the two companies had entered into discussions to merge. Per the Board, absent a specific proposal, engaging in discussions would be premature.

Rumors regarding a possible consolidation have been floating around for approximately five months. They began in November 2013 when Pfizer Chairman CEO Ian Read contacted AstraZeneca regarding a possible merger. At the time, AstraZeneca Chairman Leif Johansson expressed confidence in his company’s ability to continue to operate independently. However, AstraZeneca did agree to an exploratory meeting and the two companies met on January 5th, 2014 in New York.

It was during this meeting that Pfizer made a conditional proposal regarding an offer for AstraZeneca, which comprised cash, stock, and the creation of a holding company listed and headquartered in the U.S.

A week later AstraZeneca wrote Pfizer to reject the proposal and has not engaged further with the company. As reasons for its actions, AstraZeneca cited the proposal significantly undervaluing AstraZeneca and its prospects, as well as concerns over the transaction structure, which contained a large proportion of Pfizer shares. On January 15th came word that Pfizer was no longer actively considering making an offer.

AstraZeneca shares do not seem to have been affected by the discussions. A release from the company notes that since January, its share price has performed strongly and consistently, which is attributed to the company’s efforts to deliver on its strategy. Part of that strategy includes the strengthening of its diabetes products and the progression of its oncology pipeline.

The release further notes the Board of AstraZeneca remains committed to executing the full strategy announced in March 2013, which includes:

  • Driving a pure-play, innovative, science-based biopharmaceutical business across three high-growth therapeutic areas: oncology; cardio-metabolism; respiratory, inflammation and autoimmunity;
  • Capitalizing on AstraZeneca’s key existing growth platforms, in particular the growth potential in Brilinta, diabetes, respiratory, Japan, and AstraZeneca’s leading presence in emerging markets, such as China, where significant further potential exists;
  • Building on AstraZeneca’s unique positioning in oncology to provide innovative therapies within its portfolio and exploit combination synergies between small and large molecules, with the publication of key pipeline data expected in 2014/2015;
  • Delivering on and accelerating a growing late stage pipeline which currently comprises 11 phase III programs and 28 phase II programs; and
  • A clear capital allocation policy including a commitment to a strong balance sheet, a progressive dividend policy and a strong, investment grade credit rating. This framework allows AstraZeneca to continue to generate significant value for AstraZeneca shareholders balancing further investment in the pipeline and growth alongside a sustained drive for productivity and efficiencies.

The release further notes AstraZeneca has “demonstrated strong momentum across all elements of this strategy, through accelerated development of the pipeline and business development opportunities and implementation of organizational changes with significant anticipated financial benefits. This was evidenced most recently in AstraZeneca’s Q1 results which highlighted the significant progress made towards achieving scientific leadership in core therapeutic areas.”

AstraZeneca’s statement was made without the prior agreement or approval of Pfizer.