Pfizer Inc.'s (NYSE:PFE) failed bid to acquire U.K.-based AstraZeneca (NYSE:AZN) last year suggests that dealmakers are hard at work identifying new acquisition targets for the global drugmaker. If so, investors are right to ponder whether Pfizer's next target will be another foreign company or one located right here in the United States. To help answer that question, we asked three Motley Fool healthcare contributors to tell us what they think would be a perfect match for Pfizer.
Leo Sun: Shire Pharmaceuticals (NASDAQ:SHPG), which AbbVie (NYSE:ABBV) nearly bought for $55 billion last year, would be a great fit for Pfizer. Like AstraZeneca, Shire is based in the U.K., which makes it a good choice if Pfizer still wants to cut its tax bill through an inversion. However, recent U.S. tax law changes -- which led AbbVie to drop its bid -- diminish some of those benefits.
Shire's annual revenue only came in at less than a fifth of AstraZeneca's last year, but its top line grew while AstraZeneca's shrank. Shire's three core attention deficit hyperactive disorder (ADHD) drugs -- Vyvanse, Intuniv, and Adderall XR -- all posted double-digit year-over-year sales growth last quarter and together accounted for 35% of its top line. The drawback is that Intuniv and Adderall XR currently face generic competition.
The rest of Shire's portfolio is comprised of treatments for rare diseases such as Gaucher disease, Fabry disease, Hunter syndrome, and hereditary angioedema, or HAE. All of those drugs except for HAE drug Cinryze, which Shire has held for less than a year, posted double-digit year-over-year growth. Shire expanded its rare-disease portfolio by acquiring ViroPharma and NPS Pharmaceuticals, which could both offset declines in its ADHD business.
Therefore, acquiring Shire would be a smart way to strengthen Pfizer's Global Innovative Pharmaceuticals unit, which posted a 5% year-over-year sales decline in the first nine months of 2014.
Cheryl Swanson: One good possibility for Pfizer could be right in the heart of America. Chicago-based drugmaker AbbVie checks the boxes Pfizer is looking for in a number of areas.
Pfizer badly needs to shore up its crumbling drug portfolio, and AbbVie has something new and promising to offer in Viekira Pak. The hepatitis C drug scored a big win when Express Scripts, the nation's largest prescription manager, negotiated a deal that approves only AbbVie's treatment for certain hepatitis C patients, rather than competing drugs from rival Gilead Sciences.
AbbVie also has several promising late-stage pipeline candidates in oncology, any one of which could end up a successful earner for Pfizer's global oncology business. Then there's AbbVie's intestinal gel Duopa for Parkinson's disease, which just got the nod from the FDA last week. Last, but certainly not least, there's Humira, one of the best-selling drugs of all time. While the autoimmune biologic is going off patent in the U.S. next year, Humira's sales aren't going from $11 billion to zero overnight.
Let's suppose Pfizer does go after AbbVie. Will AbbVie come easily? Not a chance. Rumor has it that now that AbbVie has dumped Shire, it's back on the acquisition trail itself.
George Budwell: Pfizer has one of the most diverse pipelines in biopharma, with a whopping 83 clinical candidates at present. Aside from its breast cancer candidate palbociclib and high cholesterol treatment bococizumab, though, its pipeline is strangely devoid of potential blockbusters.
An easy way to remedy this problem, in my opinion, is for the pharma giant to buy the antisense drugmaker Isis Pharmaceuticals (NASDAQ:IONS). Isis has perhaps one of the best clinical pipelines in the business, sporting 29 drugs in development, with another seven expected to enter trials this year.
But what sets Isis apart from its rivals is the number of blockbuster candidates in its pipeline, which has attracted a number of top-notch collaborators, such as AstraZeneca, GlaxoSmithKline, and Biogen Idec, just to name a few. For instance, one of the company's most closely watched experimental treatments for high triglycerides, dubbed "ISIS-APOCIIIRx," has been shown in two independent studies to significantly lower the risk of heart disease. Experts have thus estimated that this single drug could see peak sales of around $2 billion as a result of these stellar clinical results. And Isis has several drugs under development with similar eye-popping value propositions.
With a market cap of only $8.2 billion and multiple blockbuster candidates in tow, Isis looks like a huge bargain compared with the behemoth AstraZeneca, making it a top buyout target this year.
Cheryl Swanson owns shares of Gilead Sciences. George Budwell owns shares of AbbVie Inc., Gilead Sciences, Isis Pharmaceuticals, and NPS Pharmaceuticals, Inc. Leo Sun owns shares of GlaxoSmithKline and Pfizer. The Motley Fool recommends Express Scripts, Gilead Sciences, GlaxoSmithKline, and Isis Pharmaceuticals. The Motley Fool owns shares of Express Scripts and Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.