As AstraZeneca's new CEO prepares to step in, calls for M&A intensify

Analysts have blazed a trail for AstraZeneca ($AZN). Destination: Forest Laboratories. As the Financial Times reports, at least three investment firms have advocated an AstraZeneca-Forest deal. The question is whether incoming CEO Pascal Soriot should follow their path.

AstraZeneca's troubles are well known. It's plagued with all the usual Big Pharma problems--patent cliff, pricing pressure, pipeline woes--but its case is more extreme than some of its rivals'. Previous countermeasures didn't work well enough to keep key shareholders off ex-CEO David Brennan's back.

So what should Soriot do? Make some deals, or so the consensus goes. The company's cash pile--$3 billion now, rising to $13 billion by 2018, the FT figures--gives him the freedom to shop. Buy Forest Labs? That's what Leerink Swann and Liberum Capital have advocated.

And now Exane BNP Paribas adds its voice to the chorus, focusing on the companies' respiratory drugs. AstraZeneca's Symbicort is a big seller, but AZ doesn't have a follow-up coming, while Forest recently won FDA approval for its long-acting muscarinic agonist Tudorza, which "could be complementary to Symbicort," the analysts wrote. The only trouble is price, which they figure at at least $45 per share, or about $13 billion, which might be too high for AZ.

Soriot, who comes to AstraZeneca from Roche ($RHHBY), will have his own ideas, of course. He's scheduled to unveil them in a strategic plan early next year. Till then, we won't know for sure how he's planning to navigate the future--unless he makes a deal in the meantime.

- read the FT coverage

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