May 19, 2014 3 min read

LONDON – Now AstraZeneca has to hope it can deliver on its vaunted drug pipeline.

On Monday, AstraZeneca, the Anglo-Swedish drugmaker, rejected Pfizer’s latest – and what it described as its “final” – bid to create the world’s largest pharmaceutical company.

Barring a last-minute change of heart by AstraZeneca’s board or another sweetened bid by Pfizer later this week, the likelihood of a potential deal looks bleak. Under British takeover rules, Pfizer has until May 26 – a holiday this year in Britain and the United States – to decide whether to walk away.

The latest offer, made Sunday evening, was worth about $119 billion. On Monday, AstraZeneca responded that the increased bid “undervalues the company and its attractive prospects.”

In making its final offer Sunday, Pfizer said it did not believe that AstraZeneca’s board was prepared to recommend a deal “at a reasonable price” and encouraged AstraZeneca’s shareholders to urge the company to engage in “meaningful dialogue” about a potential combination.

Pfizer, which began its pursuit of a merger last year, said it will not make a hostile bid.

A Pfizer spokesman said Monday the company was evaluating its options after the latest rejection.

Leif Johansson, the AstraZeneca chairman, said in a statement that Pfizer’s pursuit all along “appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimization.”

He was referring to Pfizer’s plan to reincorporate in Britain through the transaction to substantially reduce its U.S. tax bill.

“From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case,” Johansson said. “The board is firm in its conviction as to the appropriate terms to recommend to shareholders.”

AstraZeneca’s pipeline includes potential treatments for cancer, cardiovascular disease and asthma. One promising area is its immuno-oncology drugs, which use the body’s immune system to attack tumors.

MEDI4736, a cancer treatment in development, is one drug that company is pointing to as a reason to be optimistic about its pipeline. The company expects the drug could earn $6.5 billion in peak annual sales.

Pfizer, the maker of top-selling drugs like Lipitor and Viagra, has raised questions about AstraZeneca’s prospects as a stand-alone concern and vowed to keep jobs in Britain in a bid to persuade British politicians to support the transaction.