A merger of drugmakers AstraZeneca Plc and Gilead Sciences Inc. is unlikely, according to analysts, after Bloomberg News reported that the U.K. company made a preliminary approach to its U.S. peer last month.

Political opposition from both Britain and America could derail any attempt at a deal, especially given the backdrop of the Covid-19 outbreak, Citi said. The timing is also questionable, as while Gilead is in the middle of a turnaround, AstraZeneca is well positioned and has a strong pipeline, analysts said.

Yet there is potential for synergies, and Gilead could compliment AstraZeneca’s portfolio in the areas of virology and inflammatory treatment, according to RBC.

AstraZeneca shares (AZN) fell 2.2% in early trading in London, slightly more than a 1.3% decline for the Stoxx 600 Health Care Index. Gilead (GILD) rose 3.6% in premarket trading.

Jefferies, Peter Welford (hold rated on AstraZeneca)

• A deal is unlikely given the limited strategic rationale for AstraZeneca at this time, and while Gilead is in the middle of a turnaround
• AstraZeneca has a decent pipeline, and an “operating leverage thesis” that is fueled by top-line growth
• Struggle to see either company’s motivation to continue talks

Citi, Andrew Baum (buy rated on AstraZeneca)

• U.S. government would likely try to block any acquisition of a major U.S. biopharma company that is involved in pandemic therapeutic development
• Even greater political opposition seen from the U.K. government

Barclays, Carter Gould (underweight rated on Gilead)

• Such a merger would be surprising, as Gilead’s new strategy has only started to take shape in the last six months
• Recent “mega-mergers” have been conducted by companies facing notable patent cliffs, which is not an issue for AstraZeneca

RBC, Brian Abrahams (outperform rated on Gilead)

• A merger could potentially result in some synergies
• Gilead’s assets could add to AstraZeneca’s product portfolio, particularly in virology and inflammatory areas

Intron Health Research, Naresh Chouhan (hold rated on AstraZeneca)

• While an acquisition of Gilead appears unlikely, it would be highly EPS accretive even at $115/share, but it would destroy considerable value and lead to AstraZeneca de-rating
• Believe $1.5 billion of synergies are easily possible and AstraZeneca can afford the deal, but don’t see it being in investors’ interests

Goldman Sachs, Terence Flynn (sell rated on Gilead)

• No view on likelihood of a potential deal, but the news is likely to intensify debate around large-scale M&A in the biopharma sector
• Continue to see a limited path to upside for Gilead on fundamentals

Bryan Garnier, Eric Le Berrigaud (buy rated on AstraZeneca)

• The most worrying aspect of the report is that it suggests that AstraZeneca doesn’t have everything it needs to deliver the “brilliant future almost everyone is now painting for the group”