Pfizer's still a likely buyer after its $17B 'hors d'oeuvre'

Pfizer CEO Ian Read

A few months ago, Pfizer ($PFE) had $33 billion in cash and a yen for dealmaking, with CEO Ian Read scouting for acquisitions that create value "in the near term." Now, after signing up to acquire Hospira ($HSP) for $17 billion, the company is just getting started, analysts say, pointing to Pfizer's failed quest for AstraZeneca ($AZN) as evidence that the drugmaker is looking for some transformational M&A.

As Bloomberg reports, the Hospira buyout will give Pfizer a needed jolt in its established products business and a bigger share of the soon-to-explode market for biosimilars. That checks off a few of those near-term needs Read identified, but Hospira is no AstraZeneca, and Pfizer's prior interest in a huge deal suggests it will soon go back to the buyout well.

"You don't go from potentially paying $120 billion for a major deal to something that's basically an hors d'oeuvre," SunTrust Banks analyst John Boris told Bloomberg. "M&A will continue to be dominant."

Pfizer's failed bid for AstraZeneca was primarily driven with two things: a U.K. address that could reduce its tax burden and an entry into the blockbuster world of immunotherapies for cancer. Pfizer made up ground on the latter score largely through a roughly $2.9 billion deal with Merck KGaA signed in November, but it remains stuck with a U.S. tax bill.

Now analysts say Pfizer may make another run at Actavis ($ACT), an Irish-headquartered company whose price tag just got a lot steeper thanks to a $66 billion acquisition of Allergan. Rumors also implicate Mylan ($MYL), Valeant Pharmaceuticals ($VRX) and even GlaxoSmithKline ($GSK) among potential targets. But changing political winds have made such tax-saving moves, called inversions, more difficult and less lucrative, especially for high-profile companies like Pfizer.

Absent any major M&A splash, Pfizer is counting on a handful of new medicines to bolster its bottom line. Leading the way is palbociclib, approved this week as Ibrance for breast cancer, which analysts say could peak at between $3 billion and $5 billion a year in sales. Then there's bococizumab, a member of a newfangled class of cardio therapies with blockbuster expectations, followed by ertugliflozin, a Merck ($MRK)-partnered diabetes treatment.

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