Mega-mergers could be back in pharma sector, but is Pfizer bid for AstraZeneca likely to succeed?

This weekend’s revelation about a possible acquisition of Anglo-Swedish drug major AstraZeneca by the world’s largest pharma company Pfizer for around $100 billion (£60 billion) would suggest that the mega-merger mentality could be back on the pharmaceutical agenda, which has been absent since before 2010.

Although AstraZeneca has reportedly rejected Pfizer’s rumored advances (as reported earlier), there is every reason the drug behemoth will come back with an improved offer, but it is already offering a 25% premium to AstraZeneca’s current valuation. Moreover, the latter is suffering similar patent cliff problems to those of Pfizer.

The proposed deal was announced at the start of a four-day holiday weekend, so stock market reaction was not available until this morning. However, AstraZeneca’s shares gained around 8.3% to £40.95 in early trading this morning.