With Brennan gone, AstraZeneca megamerger talk can resume

For years, AstraZeneca ($AZN) CEO David Brennan repeated his "no new megamergers" pledge. But now, the company is searching for a new CEO--and still has the same post-patent-cliff problems to address. So, is the door open to a megamerger now?

Some market-watchers believe it should be. Liberum, for one. As the Guardian reports, analyst Naresh Chouhan is playing matchmaker, hoping for an arranged marriage between AstraZeneca and the Abbott Laboratories' ($ABT) soon-to-be-spun-off pharma division, AbbVie.

"Without the need to pay a premium, we believe the $4 billion or so of synergies would create $50 billion of value, and the chief executive void at Astra will make it easier to agree on a deal," Chouhan wrote in a note to investors.

If not AbbVie, then Eli Lilly ($LLY) would do, Chouhan says. And failing a "merger of equals," which he admits is "perhaps difficult to engineer," AstraZeneca should shop for a specialty pharma or two. Forest Laboratories ($FRX), Warner Chilcott ($WRX) or Amylin ($AMLN), for instance. Meanwhile, the company could buy in some already-launched drugs to use spare manufacturing capacity and boost sales. And reorganize R&D around Cambridge--either U.S. or U.K.--or in the San Francisco area.

The kicker? An overhaul of management pay. Chouhan believes AstraZeneca's execs are incentivized for short-term results rather than long-term thinking--and it's the long term that the company needs to worry about now.

- read the Guardian post