Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Pfizer Inc. did the second-biggest biotech deal of 2016, a $14 billion take-out Medivation, after the Treasury Department slapped it away from the biggest merger in pharma history. After all that, you might think Pfizer would be done with M&A for a bit. 

Unlikely. The company on Tuesday reported fourth-quarter earnings and 2017 revenue guidance that missed forecasts. With a weak late-stage pipeline and outsize dependence on older drugs, Pfizer has more buying to do if it wants its pharmaceutical sales to grow. 

Pfizer has not been able to hold on to share price gains from last summer
Source: Bloomberg

Pfizer's R&D spending exceeds that of just about everyone in the industry, ranking behind only Roche Holding AG on a trailing three-year basis, according to Bloomberg Intelligence. Despite that, Pfizer has struggled to produce new blockbusters.

Analysts project its near-term pipeline assets, many of which are late to market, will add a total of $1.5 billion in sales in 2020. Even with 2016's M&A additions Eucrisa and Xtandi, expected to add $2.2 billion over the same period, the company has too much riding on breast-cancer drug Ibrance and declining older drugs to feel comfortable. 

Canceling Out
Pfizer's pharma growth is all about Ibrance and acquisitions. But if it's going to make up for the expected revenue shortfall from generic competition, it's going to need to do more
Source: Bloomberg
Includes only drugs with estimates from at least four analysts

It won't be easy to find a target. Pfizer prefers deals with quick top-line impact, and other firms have similar designs. Now that Johnson & Johnson has taken Actelion Ltd. off the table, there are only eight U.S. or European biopharma companies with market caps below $40 billion and trailing 12-month revenue above $1 billion. Not all of them are attractive acquisition targets, and any of them will be expensive.

Pfizer may even consider a megadeal for Bristol-Myers Squibb Co. that jumps it into immune-oncology contention, or one with Biogen Inc. that gets it into brain-focused drugs. Those troubled firms have lost around $40 billion and $50 billion, respectively, from their peak market caps. 

Given Pfizer's need and historic aggressiveness, nothing can be taken off the table.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Max Nisen in New York at

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