PfizerTo all Pfizer-watchers hoping the company would do something dramatic to change its fortunes: Here you go. Pfizer is negotiating to buy Wyeth in a deal valued at up to $60 billion, the Wall Street Journal reports. Anonymous sources close to the deal told the newspaper that the talks have been going on for months and could collapse at any time, given the beleaguered economy and erratic markets.

Just what would a Pfizer-Wyeth combo look like? The combined company would bring in about $75 billion in revenue annually, and it would boast some of the biggest blockbusters in the business. (Unfortunately, two of those big drugs–Pfizer's Lipitor and Wyeth's Effexor–are set to go off patent soon.) Presumably, it would be able to cut costs by combining administrative functions, sales and marketing, manufacturing, and even R&D.

As the WSJ points out, Wall Street has been after Pfizer to do a big merger deal for some time. Patent expirations, generic competition, tougher regulators, and thin pipelines together make a persuasive case that Big Pharma needs to go through a wave of consolidation. Wyeth is a particularly tasty target for Pfizer because of its inroads into biotech meds, such as Enbrel, which is co-markets with Amgen. Wyeth also has the successful childhood vaccine Prevnar. And its consumer health and animal health units could serve as a diversification play.

But Pfizer has run into trouble digesting big acquisitions before. And though consolidating R&D might look good on paper, especially to a finance exec who doesn't know science, the promised efficiencies haven't always borne out in the past, for Pfizer or for other pharma firms. As Derek Lowe at In the Pipeline pointed out just last week, research output doesn't necessarily scale up along with department size; sometimes, bigger is worse. Indeed, some rival drugmakers have been busting up their big R&D operations into smaller–and, they hope, nimbler and more productive–units.

Meanwhile, M&A proponents say now is the time to strike. The very market conditions that have complicated these merger talks are also making buyout targets cheaper. And Pfizer is sitting on quite a cache of cash: $26 billion in cash, cash equivalents and short-term investments. Will Wyeth be the ticket? We'll have to wait and see.