The momentous merger between two of the world's largest pharmaceuticals companies is officially off the table, and suddenly AstraZeneca (AZN) chief Pascal Soriot faces an even greater challenge than he did a month ago.
Rewind to the first week in April and Mr Soriot was busy turning around the fortunes of AstraZeneca, the Anglo-Swedish drug giant criticised for its lack of innovation and growth. It was at this point we identified the potential in the group's oncology programme, albeit still in its very early stages, as a game-changer for the FTSE behemoth and advised readers to pick up the shares (Buy, 3,754p, 16 Apr 2014). Just three days later, news broke that US giant Pfizer (US: PFE) was back on the M&A hunt and had targeted Astra as early as January this year.
In the four weeks since, offers have flown back and forth, but Astra's board has swiftly rejected each one. The latest offer constituted a total of £69bn for the company, but was rebuffed once again. Now rumours are swirling about disgruntled shareholders urging AstraZeneca to reconsider. For example, Schroders - one of AstraZeneca's largest shareholders - said the company had acted "prematurely" to disregard the offer so quickly.
But Astra chairman Leif Johansson said Pfizer had grossly underestimated the future value of the company's product pipeline and specifically its development of new oncology treatments. At the time it seemed a robust defence, but now AstraZeneca faces the mammoth task of delivering on those promises - and all on its own.
In January, Mr Soriot announced that AstraZeneca would grow revenues by three-quarters over the next decade as a slew of new medicines hit the market. Several analysts discredited the targets as overly ambitious, and even if some investors believed him then, Mr Soriot now risks disappointment on a far wider scale should such predictions fall flat.
Investors' patience will be strongly tested by any clinical delays or failures, but other analysts - including renowned fund manager Neil Woodford - agree that a new wave of oncology treatments based on using the body's own immune system to fight cancer holds the key to AstraZeneca's future.
