Pfizer's Potential Buys, Big and Small

Pfizer(PFE Quote) CEO Jeff Kindler says the drug giant is open to acquisitions large and small, so let the deal-making guessing game begin.

Might Pfizer buy Amgen(AMGN Quote) or Gilead Sciences(GILD Quote) to boost its biotech street credibility? How about another Big Pharma mega-merger with Bristol-Myers Squibb(BMY Quote) or Wyeth(WYE Quote)?

Kindler, in an interview with the Financial Times published Sunday, said Pfizer would consider a major acquisition as a way to improve the company's financial health. The "real goal is to grow revenues ... We are open to opportunities and constantly looking at those which are big, small and in between," Kindler told the paper.

Pfizer has big needs, namely a drug or several to replace the projected loss of revenue coming in 2011 when its leading anti-cholesterol drug Lipitor goes generic. Lipitor sales currently top $13 billion annually.

Pfizer does have about $20 billion in cash to spend, so Kindler has something to play with if he wants to go shopping. Drug and biotech sector observers have long anticipated a time when one of the Big Pharma companies, Pfizer included, would step up their mergers and acquisition activity, whether that be through another round of "mergers of equals" to further consolidate the drug group or through acquiring one or more of the large biotech firms.

"The industry is between a rock and hard place, solid and improving near-term EPS [earnings per share] are not being rewarded, as investors are looking out to the patent cliff period and appropriately questioning earnings persistency," said Deutsche Bank drug sector analyst Barbara Ryan in a November 2008 report calling on Big Pharma to ramp up M&A activity.