Focus on Pfizer for the Next Pharma Big Deal

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By Jacob Maslow

Pharmaceutical industrial equipment
Pharmaceutical factory equipment mixing tank on production line in pharmacy industry manufacture factory

Pharmaceutical giant, Pfizer (NYSE:PFE) , is sitting on a $33B war chest. It is in a very interesting position: It can use that money to develop new drugs to fund future growth, or it can buy growth. It can acquire companies that have strong patent portfolios so Pfizer can meet its annual growth targets. Companies like the size of Pfizer need to grow at a certain pace, or it will face a lot of shareholder pressure. If your company is part of many institutional investors’ portfolios, there will be a lot of pressure put on you to continue growing at a certain pace.

Unfortunately, just like with any large bureaucracy, this isn’t always possible. Moreover, Pfizer’s patent bench is looking worse for the wear. It doesn’t have any major drug breakthroughs in the pipeline. Not surprisingly, a lot of attention has been focused on the huge amount of money Pfizer has on its balance sheet. Will it use that money to buy back more shares like it’s currently doing? Alternatively, will it use that money to buy growth? The pressure is mounting. Pfizer needs to make a move.
There have been reports that Pfizer was trying to acquire Teva Pharmaceuticals of Israel (NYSE:TEVA). Apparently, that deal didn’t even come close to materializing. That’s the kind of pressure Pfizer is under.
Whether the next big deal involves buying out new patents or buying revenue or growth, it doesn’t matter. Pressure is building for Pfizer to show continued growth yearly. Accordingly, if you’re looking for the next big deal in the pharma space, keep your eyes focused on Pfizer.
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