Does AstraZeneca still get Pfizer excited?

Has US interest in AstraZeneca dissipated now that tax loopholes have been shut?

AstraZeneca sign
Source: Bloomberg

AstraZeneca is due to report its third-quarter figures on Thursday 6 November. The markets are expecting the pharmaceutical company to post softer adjusted earnings per share of $1.03, from $1.301. Sales for the latest quarter are expected to come in at $6.419 billion, slightly weaker than the previous quarter's $6.454 billion. The company should see its pre-tax profits increase from $866 million up to $1.648 billion.

The last week saw one of AstraZeneca’s key diabetes drugs gain FDA approval, and has subsequently seen a run on the share price back up above the £45 level. This news is fresh confirmation that the pharmaceutical company’s stable of developing drugs has warranted the research and development money that has been spent.

This FDA approval brings the company a step closer to having another drug to offer to the highly lucrative US market. The timeline for Pfizer to restart discussions with AstraZeneca is fast approaching. It is now almost six months since May’s failed discussions, and under the UK’s takeover and mergers rules Pfizer will soon be able to act. The question is; are they still interested? The tax benefits are no longer an issue, but Pfizer still has a number of its top-earning drugs coming to the end of their patents next year and will be looking to replace them with others that will offer them the advantageous exclusivity pricing.

At the height of market M&A expectation the shares traded over £48 and they are currently still some £3 lower. Without renewed interest from Pfizer they are unlikely to break above this in the short term. However, if Pfizer comes back to the table £48 worth of value could be the starting point for discussions

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