M&A that is largely focused on asset-stripping and operational synergies are much more damaging in terms of innovation
Pfizer has been fairly subdued since the AstraZeneca deal collapse. "Whether this is indicative of the fact that it is biding its time to repeat the attempt to secure AstraZeneca's assets or rethink its corporate strategy, remains to be seen. The financial benefits of an AstraZeneca deal have been impacted by changes to the US tax laws regarding repatriation of overseas earnings, and the company might therefore look closer to home as far as external investment opportunity goes," says analyst Mr Joshua Owide, GlobalData's director of healthcare industry dynamics.
Biologics and specialty diseases
While many big pharma companies pursue a path of smaller-scale biotech acquisitions, Pfizer appears intent on retaining its large-scale M&A model.
"Pfizer might look at companies such as BMS Bristol-Myers Squibb or Eli Lilly, to expand its base business. Recent market movements have made a number of US biotech companies extremely costly as potential targets, and so more established, large-scale companies with greater opportunity for cost-stripping could present a more appealing investment opportunity. Those companies operating in biologics will undoubtedly be brighter on Pfizer's radar," said Mr Owide.
Again, biologics will be a key focal point, similar to the Wyeth deal a few years ago, while companies with strong development pipelines will be of particular interest, given Pfizer's own shortcomings in terms of new product developments.
Mr Owide commented that Pfizer has struggled to match its size through R&D and is therefore particularly reliant on external innovation to maintain its position as a global pharmaceutical leader. "Despite Pfizer's historical presence in primary care diseases, the company is shifting increasingly towards specialty diseases, and this will also play a major role in determining its future acquisition targets," explained Mr Owide.
India or China?
What about developing markets like India or China? Will Pfizer cast its shadow on these markets this year? Analysts say that there is always potential for companies to invest in emerging markets, notably in India, where the generics market is thriving.