By Clayton Browne 

It looks like controversial drug maker Allergan (AGN) is at it again. According to an October 28th article in the Wall Street Journal, pharmaceutical industry giants Pfizer (PFE) and Allergan are involved in discussions regarding a blockbuster merger in the white hot pharma sector.

Based on information provided by sources close to the talks, Pfizer approached Allergan about a deal, however, the negotiations are still preliminary and no deal may be forthcoming.

As of Wednesday’s close, Allergan had a market cap of around $112.5 billion. That means that a deal for the firm would be the biggest takeover in a year that is almost certain to set records for mergers and acquisitions activity.

Valuewalk outlined Allergan’s aggressive takeover strategy back in July, and the M&A focused pharma has continued to make deal after deal to establish category dominance and pricing control.

Allergan – Pfizer deal has major obstacles to overcome

Pharma industry analysts point out that there are several serious obstacles to be overcome for any kind of deal to come to fruition. Price could very well be a stumbling block right out of the gate. Pfizer Chief Executive Ian Read said during an earnings cc earlier this week that he had noticed falling share prices for rival drug makers. Of note, he also said, “I’m not sure there has been a readjustment in what the investors and leaders of those companies believe those companies are worth in a transactional situation.”

One source noted that other potential issues that could scuttle a deal are the extent to which Pfizer would agree to lay offs and closing of facilities, the fate of Allergan CEO Brent Saunders, as well as the makeup of the new firm’s management team.

A deal with Allergan would bring anti-wrinkle treatment Botox, eye treatment Restasis and a several other blockbuster drugs to Pfizer’s already impressive array of patent-protected medicines. The pharma major has making efforts to boost its branded-drug portfolio after finalizing a $16 billion acquisition of Hospira early this year that shored up its off-patent drug business.