AstraZeneca's plan to avoid megamergers suffers after pipeline setbacks

AstraZeneca ($AZN) has been one of the major drugmakers that have steered clear of megamergers and all the expense and integration challenges that come with the humongous deals. But setbacks in clinical trials and on the regulatory front have cast into doubt whether the London-based biopharma can avoid a blockbuster buyout to bring the company much needed new products and revenue, analysts told Bloomberg.

Let us count the ways AZ has struggled. The FDA this week shot down AZ and partner Bristol-Myers Squibb's ($BMY) bid for approval of diabetes drug dapagliflozin, asking for further data that will delay any U.S. market nod for the med. That setback came after other bad news related to the company's drugs for ovarian cancer and major depression. With its stock price sinking, AstraZeneca's price relative to its earnings lags behind its Big Pharma peers, Reuters revealed in a graphic today. And the pharma faces the loss of its U.S. patent for its blockbuster antipsychotic drug Seroquel later this year, opening the door for cheaper generic versions to enter the market.

"They are gradually running out of options," Credit Suisse analyst Luisa Hector told Bloomberg. The news service didn't report any likely targets for an AZ acquisition, yet it did point out that the company's $15.2 billion takeover of U.S. biotech MedImmune in 2007 failed to deliver on its expectations.

Based on recent comments in the press, many biopharma chiefs appear to be more in favor of "bolt-on" acquisitions that are much smaller than Roche's buyout of Genentech or Pfizer's ($PFE) merger with Wyeth. Sanofi ($SNY) CEO Chris Viehbacher had said that he wasn't looking for a super-sized merger after he took the reins at the French drug giant in late 2008, but then he ended up pulling the trigger on the $20.1 billion buyout of Genzyme last year. We'll see whether AstraZeneca CEO David Brennan will stick to his own plan to stay clear of such a merger.

- get more in the Bloomberg article

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