"For Pfizer, this now puts them in a position where they went out there to become the super pharmaceutical company in one fell swoop, and now that's not going to happen," said Steve Brozak, president of WBB Securities. "Now the question becomes, do they look for another target or rethink their strategy?"
Pfizer's decision is likely just a temporary strategic retreat, said Erik Gordon, a professor at University of Michigan's Ross School of Business.
That's because Pfizer still needs to strengthen its new product pipeline and also minimize the high U.S. taxes it pays on overseas income — two goals an AstraZeneca acquisition could help fulfill.
Gordon expects that Pfizer's next move will be to push the institutional investors who own large blocks of AstraZeneca shares to help persuade the company's board to open up deal talks with Pfizer after 90 days and share more details on its slate of potential new drugs that could justify a higher offer.
"I'd be surprised if AstraZeneca doesn't hear from Pfizer again," he said.
Pfizer slipped from the world's largest drugmaker to No. 2 last year, behind Novartis AG, mainly because Lipitor got generic competition at the end of 2011, wiping out several billion dollars in annual sales.
Pfizer also has sold off a couple parts of its business and reorganized as part of preparations to possibly break off another part of the company, something analysts have been urging it to do.
Still, it's developed a track record for flexing marketing muscle and pulling off mega mergers, which together have repeatedly propelled it to the top.
Since 2000, it's done three acquisitions that vaulted the company to No. 1 in revenue. It paid $111.8 billion for Warner-Lambert Co. in 2000 to get the rights to Lipitor, then $59.8 billion for Pharmacia Corp. in 2003 and $68 billion for Wyeth in 2009, according to Dealogic.