Let’s not make a deal

21 April 2014 By Robert Cyran Follow @rob_cyran

Sure, buying $84 bln AstraZeneca would yield tons of savings, and put cash trapped overseas to work. But big pharma deals often create more harm than good. Pfizer’s deal binge last decade led to poor investment returns. Subsequent slimming down has caused it to nearly double.

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AstraZeneca refused a 60 billion pound ($101 billion) bid for the company from Pfizer, according to a report in Britain’s Sunday Times. Analysts expect the UK company’s earnings to fall more than 15 percent this year, as it loses U.S. patent protection over a key heartburn drug in May. Both companies refused to comment on the matter.

Pfizer’s last big acquisition was in 2009, when it bought U.S. rival Wyeth for $68 billion. Since Ian Read became chief executive in late 2010, the company has sold its infant nutrition business for $12 billion, sold its Capsugel pill production unit for $2.4 billion, and completely spun off animal health unit Zoetis to shareholders.

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