05 October 2018
Just hours after Pfizer unveiled its CEO succession plan, industry watchers were already buzzing away on one key question: Will incoming chief Albert Bourla go after some big M&A deals?
On the one hand, Bourla, who now serves as COO, has been with Pfizer for years and may be keen to stick to its current track, which counts on homegrown drugs to deliver growth.
"At this moment in time, the best investment we have right now is in our own pipeline," current CEO Ian Read told analysts on the company's first-quarter conference call. He’ll be hanging around as executive chairman, and Bourla said in a statement Monday that “I welcome Ian’s continuing contributions,” meaning the option to stay the course will certainly be there.
But on the other? Bourla may want to head back to the dealmaking table if he wants to step up the sales expansion, especially with generics expected to take a big bite out of Lyrica sales and vaccine star Prevnar’s sales projected to keep shrinking.
"We think Bourla could be more aggressive when it comes to large-scale M&A appetite given the company’s need to generate growth beyond 2020. That said, absent the right deal, our concerns remain surrounding the company’s long-term growth profile and continued headwinds facing key franchises," Barclays analyst Geoff Meacham wrote in a note to clients.
Pfizer hasn’t had much M&A luck as of late, but it’s not for lack of trying. After all, it did stage a high-profile pursuit of AstraZeneca that ultimately failed, and the U.S. Treasury department scuttled its record-breaking Allergan buy. The company did pull off deals for Hospira and Medivation, but those haven’t delivered as much as the company likely thought they would, Bloomberg columnist Max Nisen points out.
Analysts have been hoping to see the company try its luck again on a megabuy, particularly of a drugmaker that boasts an immuno-oncology agent with more heft than Pfizer’s own Merck KGaA-partnered Bavencio. But as Bavencio’s rivals continue to break into niche indications and pad their sales, that prospect looks less and less likely.
There aren’t any megadeal targets priced at “appropriate value,” Read said in May. Bourla will have to dig some up if he wants to buck the trend once he takes the helm this January. But that may be easier said than done, considering that Pfizer’s not the only company that’s slowed down when it comes to pulling the trigger on deals.
And Jefferies’ Jared Holz, for one, says it’s not just high valuations that are complicating matters. “The primary reason, we believe, for the lack of M&A in biotech is the rapidly evolving clinical landscape that makes it more than difficult to predict the future,” he wrote in a recent trading note to clients, adding that, “We have probably not been in an environment with this type of technological change/velocity, ever.”Print
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