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Is AstraZeneca getting ready to buy a pipeline?

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AstraZeneca CEO Pascal Soriot

AstraZeneca's bleak 2013 forecast leaves the Big Pharma company somewhere between a rock and a bargaining table. And today new CEO Pascal Soriot laid out a path of financial crumbs that led analysts to the simple conclusion that deal-making is afoot.

Exhibit A was Soriot's decision to shelve plans for stock buybacks and keep a lid on dividends, helping to send its shares down on a day that AstraZeneca ($AZN) forecast a significant dive in revenue. He jerked assumptions on profit margins and then spelled it out: "We will be open to more disruptive acquisitions, larger acquisitions if they make sense," he said, according to Reuters. But "I don't think we need a large-scale acquisition to succeed."

Soriot sounded confident about the company's experimental diabetes and oncology pipeline, but its woeful record in drug development over the past two years leaves AstraZeneca with little credibility on the R&D front. A more complete strategic plan is expected in March, meaning that Soriot has yet to hammer out a complete blueprint. 

AstraZeneca clearly doesn't have the kind of pipeline that can convince analysts that the company can quickly make up for some big patent losses. So now it will have to go out and look for assets--including some late-stage programs--that can do the job. And he'll be doing it at a time when other big outfits are in the hunt for bolt-on buyouts.

Citigroup, like other analysts, expects the bolt-on asset approach to prevail. "We think small to midsize deals are likely and potentially the biggest determinant of [earnings] changes in the next few years," Citigroup noted, according to The Wall Street Journal.

If Soriot decides to go dramatic and buy a well-respected company like Shire ($SHPG), he'll have to jump well past the $20 billion barrier that most of the Big Pharmas are operating under. No doubt it will prove very, very expensive. But on the other hand he isn't likely to face a lot of competition in the event that he goes hostile. 

- here's the story from Reuters
- read the Wall Street Journal report

Special Report: AstraZeneca - The Biggest R&D Spenders In Biopharma

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