There has been an incredible amount of discussion and debate about the potential Pfizer (NYSE: PFE) takeover of AstraZeneca (LSE: AZN) (NYSE: AZN.US) — not surprisingly, considering how the deal could affect the UK corporate landscape and science base.
As always, there are positives and negatives, risks and opportunities., So, in this article I thought I’d analyse the positives and think what Pfizer-AstraZeneca could be.
The largest pharmaceutical company in the world
The merged company would be, by some distance, the largest pharmaceutical company in the world, with a market capitalisation of £170 billion and over 130,000 employees. This would be a company with financial strength beyond anything ever seen in the drugs industry.
This would be a company which has a global research budget of $12 billion, with research centres around the globe, from California to Cambridge. The company would bring together some of the brightest and best scientific minds from the United States and Britain, and would perhaps be the closest ever commercial tie-up between the US and UK.
This company would have strengths in cancer, heart disease, neuroscience and immunology and the new disciplines of biotechnology and stem cells. In fact, the complementary drug portfolios would mean the merged companies would have strengths in most of the main therapeutic areas, and would have the research muscle to successfully compete in almost all those areas.
Greater than the sum of its parts?
Combine the research businesses of these companies and you bring together two different ways of thinking and innovating. If the combined business can reinvent itself, it could become something that’s greater than the sum of its parts.
If you could find a way to bring out the best (and not the worst) from this combined firm, you could develop a company which is world-leading, which dominates the world of healthcare, a company which has a positive, supportive culture, and which will be growing and not declining.
The resulting business would be a company producing growing profits and with an increasing dividend yield, which will expand into new therapies and markets. Employees would benefit, and so would shareholders.
There are negatives as well as positives
This is what Pfizer AstraZeneca could be. But alongside the positives there are also negatives. You could argue that the takeover is a step too far when these companies already have a lot of change to cope with. And would the firm really be able reinvent itself? I’m not so sure.
As with any such large acquisition, there are a lot of uncertainties, and only time will tell how successful such a merged company — assuming the takeover comes to pass — actually would be.
